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Item 8. Financial Statements and Supplementary Data

2022-02-22 compared with 2021-02-23 · 472 added, 491 removed, 886 unchanged (52% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of JBG SMITH Properties and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of JBG SMITH Properties and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

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The Company evaluates real estate assets for impairment whenever events or changes in circumstances occur that indicate the carrying amount of the asset may not be recoverable.

These indicators may include operating performance, intended holding periods and adverse changes in circumstances.

At December 31, 2020, the carrying value of the

Company’s real estate assets was approximately $4.77 billion, including an impairment loss in the year ended December 31, 2020 of $7.8 million .

These indicators may include operating performance, shortened anticipated holding periods, and adverse changes in circumstances.

At December 31, 2021, the carrying value

of the Company's real estate assets was approximately $4.87 billion, including an impairment loss in the year ended December 31, 2021 of $25.1 million .

Given the Company's evaluation of possible indications of impairment of real estate assets requires management to make significant judgments, performing audit procedures to evaluate whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of real estate assets may not be recoverable required an increased extent of effort and high degree of auditor judgment.

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Our audit procedures related to the evaluation of real estate assets for possible indications of impairment included the following, among others:

● We tested the effectiveness of controls over management’s review of impairment indicators, which include assessing possible circumstances that could indicate that the carrying amounts of real estate assets are not recoverable.

● We tested the effectiveness of controls over management's identification of impairment indicators, which include assessing possible circumstances that could indicate that the carrying amounts of real estate assets are not recoverable.

● We evaluated the reasonableness of management's judgments by:

– Testing real estate assets for possible indications of impairment, including searching for adverse asset-specific and/or market conditions.

– Inquiring of management and reading business performance reports and board minutes to identify properties that should be evaluated for shortened anticipated holding periods.

– Developing an expectation of assets for which impairment indicators are identified in management's analysis.

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Construction in progress, including land

Less accumulated depreciation

accumulated depreciation

( 1,368,003 )

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Total shareholders' equity of JBG SMITH Properties

Noncontrolling interests in consolidated subsidiaries

Noncontrolling interests

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

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OTHER INCOME (EXPENSE)

Income (loss) from unconsolidated real estate ventures, net

Loss from unconsolidated real estate ventures, net

Interest and other income (loss), net

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Impairment loss

Reduction of gain on bargain purchase

Total other income (expense)

INCOME (LOSS) BEFORE INCOME TAX BENEFIT

Income tax benefit

INCOME (LOSS) BEFORE INCOME TAX (EXPENSE) BENEFIT

Income tax (expense) benefit

NET INCOME (LOSS)

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Net (income) loss attributable to redeemable noncontrolling interests

Other comprehensive (income) loss attributable to redeemable noncontrolling interests

Net loss attributable to noncontrolling interests

Other comprehensive (income) loss attributable to redeemable noncontrolling interests

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO JBG SMITH PROPERTIES

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(In thousands)

Noncontrolling

Comprehensive

Common Shares

BALANCE AS OF DECEMBER 31, 2017

Net income (loss) attributable to common shareholders and noncontrolling interests

Conversion of common limited partnership units to common shares

Common shares issued pursuant to Employee Share Purchase Plan ("ESPP")

Dividends declared on common shares ($ 1.00 per common share)

Distributions to noncontrolling interests, net

Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation

Acquisition of consolidated real estate venture

Other comprehensive income

Noncontrolling

BALANCE AS OF DECEMBER 31, 2018

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Conversion of common limited partnership units to common shares

Common shares issued pursuant to ESPP

Common shares issued pursuant to Employee Share Purchase Plan ("ESPP")

Dividends declared on common shares ($ 0.90 per common share)

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BALANCE AS OF DECEMBER 31, 2020

Net loss attributable to common shareholders and noncontrolling interests

Conversion of common limited partnership units to common shares

Common shares repurchased

Common shares issued pursuant to employee incentive compensation plan and ESPP

Dividends declared on common shares ($ 0.90 per common share)

Contributions from noncontrolling interests, net

Redeemable noncontrolling interests redemption value adjustment and other comprehensive income allocation

Other comprehensive income

BALANCE AS OF DECEMBER 31, 2021

See accompanying notes to the consolidated financial statements .

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Share-based compensation expense

Depreciation and amortization, including amortization of debt issuance costs

Depreciation and amortization, including amortization of deferred financing costs

Deferred rent

(Income) loss from unconsolidated real estate ventures, net

Loss from unconsolidated real estate ventures, net

Amortization of market lease intangibles, net

Amortization of lease incentives

Reduction of gain on bargain purchase

Loss on extinguishment of debt

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Gain on sale of real estate

Losses on operating lease and other receivables

Loss on operating lease and other receivables

Income from investment funds, net

Return on capital from unconsolidated real estate ventures

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Proceeds from sale of real estate

Acquisition of interests in unconsolidated real estate ventures, net of cash acquired

Distributions of capital from unconsolidated real estate ventures

Distributions of capital from sales of unconsolidated real estate ventures

Investments in unconsolidated real estate ventures

Net cash (used in) provided by investing activities

Investments in unconsolidated real estate ventures and other

Net cash used in investing activities

FINANCING ACTIVITIES:

Acquisition of interest in consolidated real estate venture

Finance lease payments

Borrowings under mortgages payable

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Debt issuance costs

Finance lease payments

Proceeds from the issuance of common stock, net of issuance costs

Proceeds from common stock issued pursuant to ESPP

Proceeds from common shares issued pursuant to ESPP

Common shares repurchased

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Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash as of the beginning of the period

Cash and cash equivalents and restricted cash as of the end of the period

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AS OF END OF THE PERIOD:

Cash and cash equivalents

Restricted cash

Cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash, beginning of period

Cash and cash equivalents and restricted cash, end of period

See accompanying notes to the consolidated financial statements.

JBG SMITH PROPERTIES

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Year Ended December 31,

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD:

Cash and cash equivalents

Restricted cash

Cash and cash equivalents and restricted cash

SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION:

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Write-off of fully depreciated assets

Cash received for income taxes

Deconsolidation of properties

Cash (paid) received for income taxes

Deconsolidation of real estate asset

Accrued dividends to common shareholders

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JBG SMITH's portfolio reflects its longstanding strategy of owning and operating assets within Metro-served submarkets in the Washington, D.C.

metropolitan area that have high barriers to entry and vibrant urban amenities.

Over half of our portfolio is in National Landing where we serve as the exclusive developer for Amazon.com, Inc.'s ("Amazon") new headquarters, and where Virginia Tech's new $ 1 billion Innovation Campus will be located.

metropolitan area with high barriers to entry and vibrant urban amenities.

Over half of our portfolio is in National Landing in Northern Virginia, where we serve as the developer for Amazon.com, Inc.'s ("Amazon") new headquarters and where Virginia Tech's $ 1 billion Innovation Campus is under construction.

In addition, our third-party asset management and real estate services business provides fee-based real estate services to the Washington Housing Initiative ("WHI") Impact Pool, Amazon, the legacy funds formerly organized by The JBG Companies ("JBG") (the "JBG Legacy Funds") and other third parties.

Substantially all our assets are held by, and our operations are conducted through, JBG SMITH Properties LP ("JBG SMITH LP"), our operating partnership.

As of December 31, 2020, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 90.5 % of its common limited partnership units ("OP Units").

As of December 31, 2021, JBG SMITH, as its sole general partner, controlled JBG SMITH LP and owned 89.5 % of its common limited partnership units ("OP Units"), after incorporating the conversion of certain vested long-term incentive partnership units ("LTIP Units") that are convertible into OP Units.

JBG SMITH is referred to herein as "we,"

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We were organized for the purpose of receiving, via the spin-off on July 17, 2017 (the "Separation"), substantially all of the assets and liabilities of Vornado Realty Trust's ("Vornado") Washington, D.C.

On July 18, 2017, we acquired the management business and certain assets and liabilities of The JBG Companies ("JBG") (the "Combination").

On July 18, 2017, we acquired the management business and certain assets and liabilities of JBG (the "Combination").

The Separation and the Combination are collectively referred to as the "Formation Transaction."

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Additionally, we have:

(i) two under-construction assets comprising one wholly owned commercial asset totaling 274,000 square feet and one multifamily asset totaling 322 units ( 161 units at our share);

(ii) 10 wholly owned near-term development pipeline assets totaling 5.6 million square feet of estimated potential development density;

(i) one under-construction multifamily asset totaling 808 units ( 808 units at our share);

(ii) 11 near-term development pipeline assets totaling 5.3 million square feet ( 5.0 million square feet at our share) of estimated potential development density;

and (iii) 25 future development pipeline assets totaling 14.3 million square feet ( 11.6 million square feet at our share) of estimated potential development density.

We derive our revenue primarily from leases with commercial and multifamily tenants, which include fixed and percentage rents, and reimbursements from tenants for certain expenses such as real estate taxes, property operating expenses, and repairs and maintenance.

In addition, our third-party asset management and real estate services business provides fee-based real estate services to the Washington Housing Initiative ("WHI") Impact Pool, Amazon, the legacy funds formerly organized by JBG (the "JBG Legacy Funds") and other third parties.

In addition, our third-party asset management and real estate services business provides fee-based real estate services.

Only the U.S.

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All intercompany transactions and balances have been eliminated.

The accompanying consolidated financial statements include our accounts and those of our wholly owned subsidiaries and other entities, including JBG SMITH LP, in which we have a controlling financial interest.

See Note 7 for additional

information on our variable interest entities ("VIEs").

The portions of the equity and net income (loss) of consolidated subsidiaries that are not attributable to us are presented separately as amounts attributable to noncontrolling interests in our consolidated financial statements.

References to the financial statements refer to our consolidated financial statements as of December 31, 2020 and 2019, and for each of the three years in the period ended December 31, 2020.

References to our balance sheets refer to our consolidated balance sheets as of December 31, 2020 and 2019.

References to our statements of operations refer to our consolidated statements of operations for each of the three years in the period ended December 31, 2020.

References to our statements of comprehensive income (loss) refer to our consolidated statements of comprehensive income (loss) for each of the three years in the period ended December 31, 2020.

References to our statements of cash flows refer to our consolidated statements of cash flows for each of the three years in the period ended December 31, 2020.

The accompanying consolidated financial statements include our accounts and those of our wholly owned subsidiaries and consolidated variable interest entities ("VIEs"), including JBG SMITH LP.

See Note 6 for additional information on our VIEs.

The portions of the equity and net income (loss) of consolidated entities that are not attributable to us are presented separately as amounts attributable to noncontrolling interests in our consolidated financial statements.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

The most significant of these estimates include:

(i) the underlying cash flows and holding periods used in assessing impairment;

(i) the underlying cash flows and anticipated holding periods used in assessing impairment;

(ii) the determination of useful lives for tangible and intangible assets;

and (iii) the assessment of the collectability of receivables, including deferred rent receivables.

Due to the current pandemic of the novel coronavirus ("COVID-19"), commencing in March 2020, authorities in jurisdictions where our properties are located issued stay-at-home orders and restrictions on travel and permitted businesses operations.

The effects of COVID-19 have most significantly impacted the operations of many of our retail tenants, which generated approximately 7 % of our revenue for the year ended December 31, 2020, revenue from our multifamily assets, our commercial parking revenue, the operations of the Crystal City Marriott and our interest in the former unconsolidated venture that owns The Marriott Wardman Park hotel.

The extent to which COVID-19 impacts us and our tenants will depend on future developments, which are highly uncertain.

At this time, there are no outstanding stay-at-home orders in jurisdictions where our properties are located;

however, the extent and duration of restrictions on travel and permitted businesses operations and other effects of COVID-19 on us and our tenants have affected estimates used in the preparation of the underlying cash flows used in assessing our long-lived assets for impairment and the assessment of the collectability of receivables from tenants, including deferred rent receivables.

Longer anticipated holding periods for real estate assets directly reduce the likelihood of recording an impairment loss.

If there is a change in the strategy for an asset or if market conditions dictate an earlier sale date, an impairment loss may be recognized, and such loss could be material.

In March 2020, the World Health Organization declared a global pandemic related to the novel coronavirus ("COVID-19").

The significance, extent and duration of the impact of COVID-19 on us and our tenants remains largely uncertain and dependent on near-term and future developments that cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19, the distribution, effectiveness and willingness of people to take COVID-19 vaccines, the extent and effectiveness of the containment measures taken, and the response of the overall economy, the financial markets and the population, particularly in the area in which we operate.

The ultimate adverse impact of COVID-19 is highly uncertain;

however, the effects of COVID-19 on us and our tenants have affected estimates used in the preparation of the underlying cash flows used in assessing our long-lived assets for impairment and the assessment of the collectability of receivables from tenants, including deferred rent receivables.

We have made what we believe to be appropriate accounting estimates based on the facts and circumstances available as of the reporting date.

To the extent these estimates differ from actual results, our consolidated financial statements may be materially affected.

Asset Acquisitions and Business Combinations

We account for asset acquisitions, which includes the consolidation of previously unconsolidated real estate ventures, at cost, including transaction costs, plus the fair value of any assumed debt.

We estimate the fair values of acquired tangible assets (consisting of real estate, cash and cash equivalents, tenant and other receivables, investments in unconsolidated real estate ventures and other assets, as applicable), identified intangible assets and liabilities (consisting of in-place leases, above- and below-market leases, options to enter into ground leases and management contracts, as applicable), assumed debt and other liabilities, and noncontrolling interests, as applicable, based on our evaluation of information and estimates available at the date of acquisition.

Based on these estimates, we allocate the purchase price, including all transaction costs related to the acquisition and any contingent consideration, to the identified assets acquired and liabilities assumed based on their relative fair value.

We similarly account for business combinations by estimating the fair values of acquired tangible assets, identified intangible assets and liabilities, assumed debt and other liabilities, and noncontrolling interests, as applicable, based on our evaluation of information and estimates.

Any excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill, and any excess of the fair value of assets acquired over the purchase price is recorded as a gain on bargain purchase.

If, up to one year from the acquisition date, information regarding the fair value of the assets acquired and liabilities assumed is received and the estimates are refined, appropriate adjustments are made on a

prospective basis to the purchase price allocation, which may include adjustments to identified assets, assumed liabilities, and goodwill or the gain on bargain purchase, as applicable.

Transaction costs are expensed as incurred and included in "Transaction and other costs"

in our statements of operations.

For both asset acquisitions and business combinations, the results of operations of acquisitions are prospectively included in our financial statements beginning with the date of the acquisition.

During the years ended December 31, 2021 and 2020, we recorded $ 1.1 million and $ 11.2 million of credit losses against billed rent receivables, and $ 19.6 million against deferred (straight-line) rent receivables during the year ended December 31, 2020.

These losses were due to the effects of COVID-19, primarily from co-working and retail tenants, that were unable to pay rent while businesses were closed, not operating at full capacity or while employees continue to work from home.

During 2020, we began recognizing revenue from substantially all co-working tenants and retailers except for grocers, pharmacies, essential businesses and certain national credit tenants on the cash basis of accounting.

We provided rent deferrals that had been contractually due during 2020 and 2021 totaling $ 10.1 million, of which $ 4.0 million was subsequently abated and $ 1.2 million was collected.

During 2021, revenue for the majority of these tenants continued to be recognized on the cash basis of accounting.

While we have seen some improvement in performance and cash collections, our retailers and co-working tenants are still experiencing some impact from the effects of COVID-19 and may continue to experience such impact.

During the fourth quarter of 2021, we received $ 4.5 million of business interruption insurance proceeds for COVID-19 related losses, which were included in "Interest and other income (loss), net"

in our consolidated statement of operations.

Asset Acquisitions

We account for asset acquisitions at cost, which includes the consolidation of previously unconsolidated real estate ventures, including transaction costs, plus the fair value of any assumed debt.

We estimate the fair values of acquired tangible assets (consisting of real estate, tenant and other receivables, and other assets, as applicable), identified intangible assets and liabilities (consisting of in-place leases, above- and below-market leases, options to enter into ground leases and management contracts, as applicable), assumed debt and other liabilities, and noncontrolling interests, as applicable, based on our evaluation of information and estimates available at the date of acquisition.

Based on these estimates, we allocate the purchase price, including all transaction costs related to the acquisition and any contingent consideration, to

the identified assets acquired and liabilities assumed based on their relative fair value.

The results of operations of acquisitions are prospectively included in our consolidated financial statements beginning with the date of the acquisition.

The fair values of buildings are determined using the "as-if vacant"

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Amounts allocated to above- market leases are recorded as lease intangible assets in "Other assets, net"

in our balance sheets, and amounts allocated to below-market leases are recorded as lease intangible liabilities in "Other liabilities, net"

in our balance sheets.

in our consolidated balance sheets, and amounts allocated to below-market leases are recorded as lease intangible liabilities in "Other liabilities, net"

in our consolidated balance sheets.

These intangibles are amortized to "Property rental revenue"

in our statements of operations over the remaining terms of the respective leases;

in our consolidated statements of operations over the remaining terms of the respective leases;

● Factors considered in determining the value allocable to in-place leases during hypothetical lease-up periods related to space that is leased at the time of acquisition include:

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These intangible assets are recorded as lease intangible assets in "Other assets, net"

in our balance sheets and are amortized to "Depreciation and amortization expense"

in our statements of operations over the remaining term of the existing lease;

● The fair value of the in-place property management, leasing, asset management, and development and construction management contracts is based on revenue and expense projections over the estimated life of each contract discounted using a market discount rate.

These management contract intangibles are amortized to "Depreciation and amortization expense"

in our statements of operations over the weighted average life of the management contracts.

The fair value of investments in unconsolidated real estate ventures and redeemable noncontrolling interests is based on the estimated fair values of the identified assets acquired and liabilities assumed of each venture, including future expected cash flows from promote interests.

The fair value of the mortgages payable assumed is determined using current market interest rates for comparable debt financings.

The fair values of the interest rate swaps and caps are based on the estimated amounts we would receive or pay to terminate the contract at the acquisition date and are determined using interest rate pricing models and observable inputs.

The carrying value of cash, restricted cash, working capital balances, leasehold improvements and equipment, and other assets acquired and liabilities assumed approximates fair value.

in our consolidated balance sheets and are amortized to "Depreciation and amortization expense"

in our consolidated statements of operations over the remaining term of the existing lease.

Real estate is carried at cost, net of accumulated depreciation and amortization.

Maintenance and repairs are expensed as incurred and are included in "Property operating expenses"

in our statements of operations.

in our consolidated statements of operations.

As real estate is undergoing redevelopment activities, all property operating expenses directly associated with and attributable to the redevelopment, including interest expense, are capitalized to the extent that we believe such costs are recoverable through the value of the property.

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All direct and indirect costs related to development activities are capitalized into "Construction in progress, including land"

on our balance sheets, except for certain demolition costs, which are expensed as incurred.

in our consolidated balance sheets, except for certain demolition costs, which are expensed as incurred.

Direct development costs incurred include:

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The capitalization of such expenses ceases when the real estate is ready for its intended use, but no later than one-year from substantial completion of major construction activities.

Our assets and related intangible assets are reviewed for impairment whenever there are changes in circumstances or indicators that the carrying amount of the assets may not be recoverable.

These indicators may include operating performance, intended holding periods, costs in excess of budgets for under-construction assets and adverse changes in circumstances.

Our real estate and related intangible assets are reviewed for impairment whenever there are changes in circumstances or indicators that the carrying amount of the assets may not be recoverable.

These indicators may include operating performance, shortened anticipated holding periods, costs in excess of budgets for under-construction assets and adverse changes in circumstances.

An impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

Estimates of future cash flows are based on our current plans, intended holding periods and available market information at the time the analyses are prepared.

Estimates of future cash flows are based on our current plans, anticipated holding periods and available market information at the time the analyses are prepared.

An impairment loss is recognized if the carrying amount of the asset is not recoverable and is measured based on the excess of the property's carrying amount over its estimated fair value.

If our estimates of future cash flows, anticipated holding periods, or fair values change, based on market conditions or otherwise, our evaluation of impairment losses may be different and such differences could be material to our financial statements.

Estimated fair values are calculated based on the following information in order of preference, dependent upon availability:

(i) pending or executed agreements, (ii) market prices for comparable properties or (iii) the sum of discounted cash flows.

If our estimates of future cash flows, anticipated holding periods, or fair values change, based on market conditions, anticipated selling prices or other factors, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.

Estimates of future cash flows are subjective and are based, in part, on assumptions regarding future occupancy, rental rates and capital requirements that could differ materially from actual results.

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If it is determined that an entity is a VIE in which we have a variable interest, we assess whether we are the primary beneficiary of the VIE to determine whether it should be consolidated.

We are not the primary beneficiary of an entity when we do not have voting control, lack the power to direct the activities that most significantly impact the entity's economic performance, or the limited partners (or non-managing members) have substantive participatory rights.

We are not the primary beneficiary of a VIE when we do not have voting control, lack the power to direct the activities that most significantly impact the entity's economic performance, or the limited partners (or non-managing members) have substantive participatory rights.

If it is determined that the entity is not a VIE, then the determination as to whether we consolidate is based on whether we have a controlling financial interest in the entity, which is based on our voting interests and the degree of influence we have over the entity.

Management uses its judgment when determining if we are the primary beneficiary of, or have a controlling financial interest in, an entity in

which we have a variable interest.

Management uses judgment when determining if we are the primary beneficiary of or have a controlling financial interest in a VIE.

Factors considered in determining whether we have the power to direct the activities that most significantly impact the entity's economic performance include voting rights, involvement in day-to-day capital and operating decisions, and the extent of our involvement in the entity.

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Under the equity method, we record our investments in these entities in "Investments in unconsolidated real estate ventures"

on our balance sheets, and our proportionate share of earnings or losses earned by the real estate venture is recognized in "Income (loss) from unconsolidated real estate ventures, net"

in the accompanying statements of operations.

in our consolidated balance sheets, and our proportionate share of earnings or losses earned by the real estate venture is recognized in "Loss from unconsolidated real estate ventures, net"

in the accompanying consolidated statements of operations.

We earn revenue from the management services we provide to unconsolidated real estate ventures.

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We account for this revenue gross of our ownership interest in each respective real estate venture and recognize such revenue in "Third-party real estate services, including reimbursements"

in our statements of operations when earned.

Our proportionate share of related expenses is recognized in "Income (loss) from unconsolidated real estate ventures, net"

in our statements of operations.

in our consolidated statements of operations when earned.

Our proportionate share of related expenses is recognized in "Loss from unconsolidated real estate ventures, net"

in our consolidated statements of operations.

We may also earn incremental promote distributions if certain financial return benchmarks are achieved upon ultimate disposition of the underlying properties.

Promote fees are recognized when certain earnings events have occurred, and the amount is determinable and collectible.

Any promote fees are reflected in "Income (loss) from unconsolidated real estate ventures, net"

in our statements of operations.

Promote revenue is recognized when certain earnings events have occurred, and the amount of revenue is determinable and collectible.

Any promote revenue is reflected in "Loss from unconsolidated real estate ventures, net"

in our consolidated statements of operations.

With regard to distributions from unconsolidated real estate ventures, we use the information that is available to us to determine the nature of the underlying activity that generated the distributions.

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On a periodic basis, we evaluate our investments in unconsolidated real estate ventures for impairment.

We assess whether there are any indicators, including underlying property operating performance and general market conditions, that the value of our investments in unconsolidated real estate ventures may be impaired.

An investment in a real estate venture is considered impaired if we determine that its fair value is less than the net carrying value of the investment in that real estate venture on an other-than-temporary basis.

Cash flow projections for the investments consider property level factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors.

Cash flow projections for the investments consider property level factors such as expected future operating income, trends and prospects, anticipated holding periods, as well as the effects of demand, competition and other factors.

We consider various qualitative factors to determine if a decrease in the value of our investment is other-than-temporary.

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The useful lives of intangible assets are evaluated each reporting period with any changes in estimated useful lives being accounted for over the revised remaining useful life.

Intangible assets also include the wireless spectrum licenses we acquired.

While the licenses are issued for ten years, as long as we act within the requirements and constraints of the regulatory authorities, the renewal and extension of these licenses is reasonably certain at minimal cost.

Accordingly, we have concluded that the licenses are indefinite-lived intangible assets.

Investments in equity securities without readily determinable fair values are carried at cost.

Investments in investment funds without readily determinable fair values that qualify for the net asset value ("NAV") practical expedient are carried at fair value based on their reported NAV.

Investments in equity securities and investment funds are included in "Other assets"

in our consolidated balance sheets.

Realized and unrealized gains and losses are included in “Interest and other income (loss), net” in our consolidated statements of operations.

Assets Held for Sale

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(i) management, having the authority to approve action, commits to a plan to sell the property in its present condition, (ii) the sale of the property is at a price reasonable in relation to its current fair value and (iii) the sale is probable and expected to be completed within one year.

Real estate held for sale is carried at the lower of carrying amounts or estimated fair value less disposal costs.

Real estate held for sale is carried at the lower of carrying amounts or

estimated fair value less disposal costs.

Depreciation and amortization is not recognized on real estate classified as held for sale.

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Deferred financing costs consist of loan issuance costs directly related to financing transactions that are deferred and amortized over the term of the related loan as a component of interest expense.

Unamortized deferred financing costs related to our mortgages payable and unsecured term loan are presented as a direct deduction from the carrying amounts of the related debt instruments, while such costs related to our revolving credit facility are included in other assets.

Unamortized deferred financing costs related to our mortgages payable and unsecured term loans are presented as a direct deduction from the carrying amounts of the related debt instruments, while such costs related to our revolving credit facility are included in other assets.

Noncontrolling Interests

We identify our noncontrolling interests separately on our balance sheets.

Amounts of consolidated net income (loss) attributable to redeemable noncontrolling interests and to the noncontrolling interests in consolidated subsidiaries are presented separately in our statements of operations.

Redeemable Noncontrolling Interests - Redeemable noncontrolling interests consists of OP Units issued in conjunction with the Formation Transaction and our venture partners' interests in 965 Florida Avenue.

The OP Units became redeemable for our common shares or cash beginning August 1, 2018, subject to certain limitations.

Redeemable noncontrolling interests are generally redeemable at the option of the holder and are presented in the mezzanine section between total liabilities and shareholders' equity on our balance sheets.

We identify our noncontrolling interests separately in our consolidated balance sheets.

Redeemable Noncontrolling Interests - Redeemable noncontrolling interests consists of OP Units issued in conjunction with the Formation Transaction, LTIP Units issued to employees and our venture partners' interests in The Wren.

Redeemable noncontrolling interests are generally redeemable at the option of the holder for our common shares, or cash at our election, subject to certain limitations, and are presented in the mezzanine section between total liabilities and shareholders' equity in our consolidated balance sheets.

The carrying amount of redeemable noncontrolling interests is adjusted to its redemption value at the end of each reporting period, but no less than its initial carrying value, with such adjustments recognized in "Additional paid-in capital."

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Derivative instruments and hedging activities require management to make judgments on the nature of its derivatives and their effectiveness as hedges.

These judgments determine if the changes in fair value of the derivative instruments are reported in our statements of operations or as a component of comprehensive income and as a component of shareholders' equity on our balance sheets.

Derivative Financial Instruments Not Designated as Hedges - Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are considered economic hedges, but not designated as accounting hedges, and are carried at their estimated fair value on a recurring basis.

These judgments determine if the changes in fair value of the derivative instruments are reported in our consolidated statements of operations, or in our consolidated statements of comprehensive income (loss).

Derivative Financial Instruments Not Designated as Accounting Hedges - Certain derivative financial instruments, consisting of interest rate swap and cap agreements, are considered cash flow hedges, but are not designated as accounting hedges, and are carried at their estimated fair value on a recurring basis.

Realized and unrealized gains are recorded in "Interest expense"

in our statements of operations in the period in which the change occurs.

in our consolidated statements of operations in the period in which the change occurs.

Fair Value of Assets and Liabilities

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In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider counterparty credit risk in our assessment of fair value.

Investments that are valued using NAV as a practical expedient are excluded from the fair value hierarchy disclosures.

Revenue Recognition

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Differences between rental revenue recognized and amounts due under the respective lease agreements are recorded as an increase or decrease to "Deferred rent receivable, net"

on our balance sheets.

in our consolidated balance sheets.

Property rental revenue also includes the amortization or accretion of acquired above-and below-market leases.

We periodically evaluate the collectability of amounts due from tenants and recognize an adjustment to property rental revenue for accounts receivable and deferred rent receivable if we conclude it is not probable we will collect the remaining lease payments under the lease agreements.

Any changes to the provision for lease revenue determined to be not probable of collection

are included in "Property rental revenue"

in our statements of operations.

Any changes to the provision for lease revenue determined to be not probable of collection are included in "Property rental revenue"

in our consolidated statements of operations.

We exercise judgment in assessing the probability of collection and consider payment history and current credit status in making this determination.

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Judgments impacting the timing and amount of revenue recognized from our development services contracts include the determination of the nature and number of performance obligations within a contract, estimates of total development project costs, from which the fees are typically derived, and estimates of the period of time over which the development services are expected to be performed, which is the period over which the revenue is recognized.

We recognize development fees earned from unconsolidated joint venture projects to the extent of the third-party partners' ownership interest.

We recognize development fees earned from unconsolidated real estate venture projects to the extent of our venture partners' ownership interest.

Third-Party Real Estate Services Expenses

Third-party real estate services expenses include the costs associated with the management services provided to our unconsolidated real estate ventures and other third parties, including amounts paid to third-party contractors for construction management projects.

We allocate personnel and other overhead costs using the estimates of the time spent performing services for our third-party real estate services and other allocation methodologies.

We allocate personnel and other overhead costs using estimates of the time spent performing services for our third-party real estate services and other allocation methodologies.

Lessee Accounting

We are obligated under non-cancellable operating and capital leases, including ground leases on certain of our properties with terms extending through up through 2118.

We are obligated under non-cancellable operating and finance leases, including ground leases on certain of our properties with terms extending through the year 2118.

When a renewal option is included within a lease, we assess whether the option is reasonably certain of being exercised against relevant economic factors to determine whether the option period should be included as part of the lease term.

Lease payments associated with renewal periods that we are reasonably certain will be exercised are included in the measurement of the corresponding lease liability and right-of-use asset.

Lease expense for our operating leases is recognized on a straight-line basis over the expected lease term and is included in our statements of operations in either "Property operating expenses"

or "General and administrative expense"

depending on the nature of the lease.

Amortization of the right-of-use asset associated with a capital lease is recognized on a straight-line basis over the expected lease term and is included in our statements of operations in "Depreciation and amortization"

Lease expense for our operating leases is recognized on a straight-line basis over the expected lease term and is included in our consolidated statements of operations in "Property operating expenses."

Amortization of the right-of-use asset associated with a finance lease is recognized on a straight-line basis over the expected lease term and is included in our consolidated statements of operations in "Depreciation and amortization expense"

with the related interest on our outstanding lease liability included in "Interest expense."

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Certain lease agreements may also include various non-lease components that primarily relate to property operating expenses associated with our office leases, which also vary each period.

We have elected the practical expedient which allows us not to separate lease and non-lease components for our ground and office leases and recognize variable non-lease components in lease expense when incurred.

We have elected the practical expedient which allows us to combine lease and non-lease components for our ground and office leases and recognize variable non-lease components in lease expense when incurred.

We discount our future lease payments for each lease to calculate the related lease liability using an estimated incremental borrowing rate computed based on observable corporate borrowing rates reflective of the general economic environment, taking into consideration our creditworthiness and various financing and asset specific considerations, adjusted to approximate a secured borrowing for the lease term.

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Under those sections, a REIT which distributes at least 90% of its REIT taxable income as dividends to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders.

Prior to the Separation, Vornado operated as a REIT and distributed 100% of its REIT taxable income to its shareholders;

accordingly, no provision for federal income taxes has been made in the accompanying financial statements for the periods prior to the Separation.

Prior to the Separation, Vornado operated as a REIT and distributed 100% of its

REIT taxable income to its shareholders;

accordingly, no provision for federal income taxes has been made in the accompanying consolidated financial statements for the periods prior to the Separation.

We currently adhere and intend to continue to adhere to these requirements and to maintain our REIT status in future periods.

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Income taxes attributable to our TRSs are accounted for under the asset and liability method.

Under the asset and liability method, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in our financial statements, which will result in taxable or deductible amounts in the future.

Under the asset and liability method, deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in our consolidated financial statements, which will result in taxable or deductible amounts in the future.

We provide for a valuation allowance for deferred income tax assets if we believe all or some portion of the deferred tax asset may not be realized.

Any increase or decrease in the valuation allowance that results from a change in circumstances that causes a change in the estimated ability to realize the related deferred tax asset is included in deferred tax benefit (expense).

ASC 740 ("Topic 740"), Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in our financial statements.

ASC 740 ("Topic 740"), Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in our consolidated financial statements.

Topic 740 requires the evaluation of tax positions taken in the course of preparing our tax returns to determine whether the tax positions are "more-likely-than-not"

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Tax benefits of positions not deemed to meet the more-likely-than-not threshold are recorded as a tax expense in the current year.

The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") that was enacted on March 27, 2020 includes several significant tax provisions that could impact us and our TRSs.

These changes include:

● the elimination of the taxable income limit for net operating losses ("NOLs") for all taxable years beginning before January 1, 2021, thereby permitting corporate taxpayers to use NOLs to fully offset taxable income (although we, as a REIT, will continue to only be able to use NOLs against taxable income remaining after taking into account any dividends paid deduction);

● the ability for our TRSs to utilize carryback NOLs arising in 2018, 2019 and 2020 to the five taxable years preceding the taxable year of the loss;

● an increase of the business interest limitation under Section 163(j) of the Code from 30% to 50% for taxable years beginning in 2019 and 2020, and the addition of an election by taxpayers to use their 2019 adjusted taxable income as their adjusted taxable income in 2020 for purposes of applying the limitation;

technical correction "

amending Section 168(e)(3)(E) of the Code to add "qualified improvement property"

to "15-year property"

and assigning a class life of 20-years under Section 168(g)(3)(B) of the Code to qualified improvement property under Section 168(e)(3)(E)(vii) of the Code .

During the year ended December 31, 2020, as a result of the CARES Act, we made adjustments to the net deferred tax liability amounts, which relate to "qualified improvement property"

owned by our TRSs.

Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed by dividing net income (loss) attributable to common shareholders by the weighted average common shares outstanding during the period.

Unvested share-based compensation awards that entitle holders to receive non-forfeitable dividends, which include long-term incentive partnership units ("LTIP Units"),

are considered participating securities.

Consequently, we are required to apply the two-class method of computing basic and diluted earnings that would otherwise have been available to common shareholders.

Unvested share-based compensation awards that entitle holders to receive non-forfeitable dividends are considered participating securities.

Consequently, we are required to apply the two-class method of computing basic and diluted earnings (loss) that would otherwise have been available to common shareholders.

Under the two-class method, earnings for the period are allocated between common shareholders and participating securities based on their respective rights to receive dividends.

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Compensation expense is based on the fair value of our common shares at the date of the grant and is recognized ratably over the vesting period using a graded vesting attribution model.

Compensation expense for share-based compensation awards made to retirement eligible employees is recognized over a six-month period after the grant date or over the remaining period until they become retirement eligible.

We account for forfeitures as they occur.

Distributions paid on unvested OP Units, LTIP Units, LTIP Units with time-based vesting requirements ("Time-Based LTIP Units"), LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") are recorded to "Redeemable noncontrolling interests"

in our balance sheets.

Distributions paid on unvested OP Units and LTIP Units are recorded to "Redeemable noncontrolling interests"

in our consolidated balance sheets.

Distributions paid on unvested Restricted Share Units ("RSUs") are recorded to "Additional paid-in capital"

in our consolidated balance sheets.

Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2020-04, Reference Rate Reform ("Topic 848").

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update 2020-04, Reference Rate Reform ("Topic 848").

Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in Topic 848 is optional and may be elected over the period March 12, 2020 through December 31, 2022 as reference rate reform activities occur.

During the year ended December 31, 2020, we elected to apply the hedge accounting expedients related to:

(i) the assertion that our hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients allows us to continue to present our derivatives in a manner that is consistent with our past presentation.

We will continue to evaluate the impact of the guidance and may apply other elections, as applicable, as additional changes in the market occur.

COVID-19 Lease Modification Accounting Relief

Due to the business disruptions and challenges severely affecting the global economy caused by COVID-19, we have provided rent deferrals and other lease concessions to certain tenants.

In April 2020, the FASB issued a Staff Q&A that allows lessors to elect not to evaluate whether lease-related relief provided to mitigate the economic effects of COVID-19 is a lease modification under ASC Topic 842, Leases ("Topic 842") if certain criteria are met.

This election allows us to bypass a lease-by-lease analysis, and instead choose whether to apply the lease modification accounting framework, with such election applied consistently to leases with similar characteristics and circumstances.

We have elected to apply the lease modification policy relief and have accounted for lease-related relief provided to mitigate the economic effects of COVID-19 as lease modifications under Topic 842, regardless of whether the right to such relief was embedded within the terms of the lessee's lease.

During the year ended December 31, 2020, we entered into rent deferral agreements with certain tenants, many of which were placed on the cash basis of accounting, resulting in the deferral to future periods of $ 4.3 million of rent that had been contractually due in 2020.

We are in the process of negotiating additional rent deferrals and other lease concessions with some of our tenants, which have been considered when establishing credit losses against billed and deferred rent receivables.

During the year ended December 31, 2020, we recorded $ 11.2 million of credit losses against billed rent receivables and $ 19.6 million against deferred (straight-line) rent receivables.

These losses are due to the effects of COVID-19, primarily on co-working and retail tenants, that are unable to pay rent while businesses are closed, not operating at full capacity or while employees continue to work from home.

During 2020, we recorded $ 8.2 million of income associated with certain lease guarantees.

Additionally, during the second quarter of 2020, we determined that our investment in our former real estate venture that owns The Marriott Wardman Park hotel was impaired due to a decline in the fair value of the underlying asset and recorded an impairment loss of $ 6.5 million (see Note 6 for additional information).

During 2020, we put all co-working tenants and all retailers except for grocers, pharmacies, essential businesses and certain national credit tenants on the cash basis of accounting.

The Combination

In the Combination on July 18, 2017, we acquired the JBG Assets in exchange for approximately 37.2 million common shares and OP Units and cash of $ 20.6 million for total consideration valued at $ 1.2 billion.

The Combination was accounted for at fair value under the acquisition method of accounting.

The Combination resulted in a gain on bargain purchase of $ 24.4 million during the year ended December 31, 2017, as the fair value of the identifiable net assets acquired exceeded the purchase consideration.

During the year ended December 31, 2018, we finalized our fair value estimates used in the purchase price allocation related to the Combination, resulting in a reduction of the gain on bargain purchase of $ 7.6 million.

The guidance in Topic 848 is optional and may be elected over the period of March 12, 2020 through December 31, 2022 as reference rate reform activities occur.

During the year ended December 31, 2021, we did not make any elections.

During the year ended December 31, 2020, we elected to apply the hedge accounting expedients related to (i) the assertion that our hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future London Interbank Offered Rate ("LIBOR") indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

Application of these expedients preserves our past presentation of our derivatives.

We will continue to evaluate the impact of the guidance and may apply other elections, as applicable.

Acquisitions, Dispositions and Assets Held for Sale

$ 47.3 million was allocated to the former Americana Hotel site, of which $ 20.0 million has been deferred until the earlier of the approval of certain entitlements or January 1, 2023, and $ 17.7 million was allocated to the other three parcels.

In November 2021, we acquired The Batley, a 432 -unit multifamily asset in the Union Market submarket of Washington, D.C., for $ 205.3 million, exclusive of $ 3.1 million of transaction costs that were capitalized as part of the acquisition.

We intend to use The Batley as a replacement property in a like-kind exchange for the sale of Pen Place, which is expected to close during the second quarter of 2022.

See Note 6 for additional information.

In December 2020, we acquired a 1.4 -acre future development parcel in National Landing, which was formerly occupied by the Americana Hotel, and three other parcels for an aggregate total of $ 65.0 million, exclusive of $ 688,000 of transaction costs that were capitalized as part of the acquisition.

Of the total purchase price, $ 47.3 million was allocated to the former Americana Hotel site, of which $ 20.0 million has been deferred until the earlier of the approval of certain entitlements or January 1, 2023, and $ 17.7 million was allocated to the other three parcels.

The former Americana Hotel site has the potential to accommodate up to approximately 550,000 square feet of new development density and is located directly across the street from Amazon's future headquarters.

Transaction costs related to the asset acquisition of $ 688,000 were included in the cost of the acquisition.

In December 2019, we acquired F1RST Residences, a 325 -unit multifamily asset in the Ballpark submarket of Washington, D.C.

with approximately 21,000 square feet of street level retail, for $ 160.5 million through a like-kind exchange agreement with a third-party intermediary.

with approximately 21,000 square feet of street level retail, for $ 160.5 million, exclusive of $ 4.7 million of transaction costs that were capitalized as part of the acquisition.

We used F1RST Residences as a replacement property in a like-kind exchange for the sale of Metropolitan Park in January 2020.

See Note 6 for additional information.

Transaction costs related to the asset acquisition of $ 4.7 million were included in the cost of the acquisition.

In December 2018, we purchased a land parcel and the remaining interest in the West Half real estate venture for an aggregate purchase price of $ 28.0 million.

The following is a summary of disposition activity for the year ended December 31, 2020:

Date Disposed

(In thousands)

January 15, 2020

Metropolitan Park (1)

Arlington, Virginia

(1) The property, which was sold to Amazon, was part of a like-kind exchange.

In April 2021, we invested cash in and contributed land to two real estate ventures and recognized an $ 11.3 million gain on the disposition of land, which is included in "Gain on sale of real estate"

in our consolidated statement of operations for the year ended December 31, 2021.

See Note 5 for additional information.

Total square feet represents potential development density approved by Arlington County.

In June 2020, we recognized a loss of $ 3.0 million from the sale of 11333 Woodglen Drive/NoBe II Land/Woodglen ("Woodglen") by our unconsolidated real estate venture with Landmark Partners ("Landmark").

In October 2020, we recognized a gain of $ 800,000 from the sale of Pickett Industrial Park by our unconsolidated real estate venture with CBREI Venture.

In January 2020, we sold Metropolitan Park for $ 155.0 million and recognized a $ 59.5 million gain, which is included in "Gain on sale of real estate"

in our consolidated statement of operations for the year ended December 31, 2020.

During the year ended December 31, 2019, we sold three commercial assets for a gross sales price of $ 165.4 million and a 50.0 % interest in a real estate venture that owned Central Place Tower for a gross sales price of $ 220.0 million, resulting in a $ 105.0 million aggregate gain, which is included in "Gain on sale of real estate"

in our consolidated statement of operations for the year ended December 31, 2019.

During the years ended December 31, 2021 and 2020, we recognized our proportionate share of the gain (loss) from the sale of various assets by our unconsolidated real estate ventures.

See Note 5 for additional information.

During the year ended December 31, 2019, we sold three commercial assets for the gross sales price of $ 165.4 million and the 50.0 % interest in a real estate venture that owned Central Place Tower for the gross sales price of $ 220.0 million, resulting in an aggregate gain on the sale of real estate of $ 105.0 million.

During the year ended December 31, 2018, we sold four commercial assets, a future development asset and the out-of-service portion of a multifamily asset for an aggregate gross sales price of $ 427.4 million, resulting in an aggregate gain on the sale of real estate of $ 52.2 million.

On February 11, 2022, we entered into a definitive agreement with affiliates of Fortress Investment Group LLC to form a real estate venture in which we will have a noncontrolling interest.

The unconsolidated real estate venture will acquire a 1.6 million square foot portfolio of four wholly owned commercial assets from us.

The assets include 7200 Wisconsin Avenue, 1730 M Street, RTC-West and Courthouse Plaza 1 and 2.

The transaction is expected to close in the first half of 2022, subject to financing and customary closing conditions.

Assets Held for Sale

As of December 31, 2020 and 2019, we had certain real estate properties that were classified as held for sale.

The amounts included in "Assets held for sale"

in our balance sheets primarily represent the carrying value of real estate.

in our consolidated balance sheets primarily represent the carrying value of real estate.

The following is a summary of assets held for sale:

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Arlington, Virginia

Metropolitan Park (3)

Arlington, Virginia

(1) Represents estimated or approved potential development density.

(2) In March 2019, we entered into an agreement for the sale of Pen Place for approximately $ 149.9 million, subject to customary closing conditions.

We expect the sale of Pen Place to Amazon to close in 2021.

(3) As noted above, we sold Metropolitan Park to Amazon in January 2020.

(2) In March 2019, we entered into an agreement for the sale of Pen Place to Amazon, which we expect to close during the second quarter of 2022.

In December 2021, we finalized the agreement for the sale of Pen Place for $ 198.0 million, which represents a $ 48.1 million increase over the previously estimated contract value.

Tenant and Other Receivables

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Total tenant and other receivables

(1) Includes $ 8.2 million associated with certain lease guarantees as of December 31, 2020.

Investments in Unconsolidated Real Estate Ventures

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Prudential Global Investment Management ("PGIM")

Landmark Partners ("Landmark")

1.8 % - 49.0 %

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Canadian Pension Plan Investment Board ("CPPIB")

Morgan Global Alternatives ("J.P.

Morgan") (2)

Berkshire Group

Brandywine Realty Trust

Pacific Life Insurance Company ("PacLife")

Total investments in unconsolidated real estate ventures (3)

(1) Ownership interests as of December 31, 2020.

We have multiple investments with certain venture partners with varying ownership interests.

(2) As of December 31, 2020 and 2019, the difference between the investments in unconsolidated real estate ventures and the net book value of the underlying assets was $ 18.9 million and $ 14.3 million, resulting principally from capitalized interest and our zero investment balance in the real estate venture with CPPIB that owns 1101 17th Street.

(1) Reflects our effective ownership interests in the underlying real estate as of December 31, 2021.

We have multiple investments with certain venture partners with varying ownership interests in the underlying real estate.

Morgan is the advisor for an institutional investor.

(3) As of December 31, 2021 and 2020, our total investments in unconsolidated real estate ventures were greater than our share of the net book value of the underlying assets by $ 18.6 million and $ 18.9 million, resulting principally from capitalized interest and our zero investment balance in the real estate venture with CPPIB that owns 1101 17th Street.

We provide leasing, property management and other real estate services to our unconsolidated real estate ventures.

We recognized revenue, including expense reimbursements, of $ 23.7 million, $ 25.5 million and $ 28.5 million for each of the three years in the period ended December 31, 2021, for such services.

Reconsideration events could cause us to consolidate these unconsolidated real estate ventures in the future or deconsolidate a consolidated entity.

We evaluate reconsideration events as we become aware of them.

Reconsideration events include amendments to real estate venture agreements and changes in our partner's ability to make contributions to the venture.

Reconsideration events include amendments to real estate venture agreements or changes in our partner's ability to make contributions to the venture.

Under certain circumstances, we may purchase our partner's interest.

A reconsideration event could cause us to consolidate an unconsolidated real estate venture in the future or deconsolidate a consolidated entity.

The following is a summary of disposition activity by our unconsolidated real estate ventures:

Proportionate

Date Disposed

Gain (Loss) (1)

(In thousands)

Year Ended December 31, 2021

CBREI Venture

Fairway Apartments/Fairway Land ("Fairway")

Courthouse Metro Land/Courthouse Metro Land – Option ("Courthouse Metro")

5615 Fishers Lane

September 17, 2021

500 L'Enfant Plaza

Year Ended December 31, 2020

11333 Woodglen Drive/NoBe II Land/Woodglen ("Woodglen")

October 28, 2020

CBREI Venture

Pickett Industrial Park

(1) Included in "Loss from unconsolidated real estate ventures, net"

in our consolidated statements of operations.

In December 2019, we sold a 50.0 % interest in a real estate venture that owns Central Place Tower, a 552,000 square foot office building located in Arlington, Virginia, to PGIM for $ 220.0 million.

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We recognized an aggregate $ 53.4 million gain, net of certain liabilities, which was included in "Gain on sale of real estate"

in our statement of operations for the year ended December 31, 2019, on the partial sale and remeasurement of our remaining interest in the real estate venture subsequent to the transfer of control.

In June 2020, our unconsolidated real estate venture with Landmark sold Woodglen, commercial and future development assets located in Rockville, Maryland, for $ 17.8 million.

We recognized our proportionate share of the loss from the sale of $ 3.0 million, which was included in "Income (loss) from unconsolidated real estate ventures, net"

in our statement of operations for the year ended December 31, 2020.

Additionally, in connection with the sale, our unconsolidated real estate venture repaid the related mortgage payable of $ 12.2 million.

CBREI Venture

In October 2020, our unconsolidated real estate venture with CBREI Venture sold Pickett Industrial Park, a commercial asset located in Alexandria, Virginia, for $ 46.3 million.

We recognized our proportionate share of the gain from the sale of $ 800,000 , which was included in "Income (loss) from unconsolidated real estate ventures, net"

in our statement of operations for the year ended December 31, 2020.

Additionally, in connection with the sale, our unconsolidated real estate venture repaid the related mortgage payable of $ 23.6 million.

in our consolidated statement of operations for the year ended December 31, 2019, on the partial sale and remeasurement of our remaining interest in the real estate venture subsequent to the transfer of control.

In connection with the preparation and review of their 2021 annual financial statements, our unconsolidated real estate venture with Landmark recorded an aggregate impairment loss of $ 48.7 million on the L'Enfant Plaza assets.

Our proportionate share of the impairment loss was $ 23.9 million, which was included in "Loss from unconsolidated real estate ventures, net"

in our consolidated statement of operations for the year ended December 31, 2021.

In January 2022, our unconsolidated real estate venture with Landmark sold The Alaire, The Terano and 12511 Parklawn Drive, multifamily and future development assets located in Rockville, Maryland, for $ 137.5 million.

Additionally, the venture repaid the related mortgages payable of $ 79.8 million.

Our ownership in these assets ranged from 1.8 % to 18.0 %.

As of December 31, 2021 and 2020, we had a zero investment balance in the real estate venture that owns 1101 17th Street and had suspended equity loss recognition for the venture since June 30, 2018.

We will recognize as income any future distributions from the venture until our share of unrecorded earnings and contributions exceeds the cumulative excess distributions previously recognized in income.

During the years ended December 31, 2019 and 2018, we recognized income of $ 6.4 million and $ 8.3 million related to distributions from this venture, which was included in "Income (loss) from unconsolidated real estate ventures, net"

in our statement of operations.

During the year ended December 31, 2018, we also recognized the $ 5.4 million negative investment balance as income within "Income (loss) from unconsolidated real estate ventures, net"

in our statement of operations as a result of the venture refinancing a mortgage payable collateralized by the property and eliminating certain principal guaranty provisions that had been included in a prior loan.

In December 2018, our unconsolidated real estate venture with CPPIB sold The Warner, a 583,000 square foot office building located in Washington, D.C., for $ 376.5 million.

The unconsolidated real estate venture recognized a gain on sale of $ 32.5 million, of which our proportionate share was $ 20.6 million, which was included in "Income (loss) from unconsolidated real estate ventures, net"

in our statement of operations for the year ended December 31, 2018.

Additionally, in connection with the sale, our unconsolidated real estate venture repaid the related mortgage payable of $ 270.5 million.

In February 2018, we entered into a real estate venture with CPPIB to develop and own 1900 N Street, an under- construction commercial asset in Washington, D.C.

We contributed 1900 N Street, valued at $ 95.9 million, to the real estate venture, and CPPIB committed to contribute approximately $ 101.3 million to the venture for a 45.0 % interest, which reduced our ownership interest from 100.0 % at the real estate venture's formation to 55.0 % as CPPIB's contributions were funded.

In April 2020, our real estate venture with CPPIB entered into a mortgage loan with a maximum principal balance of $ 160.0 million collateralized by 1900 N Street.

The venture initially received proceeds of $ 134.5 million from the mortgage loan.

During the second quarter of 2020, we received a distribution of $ 70.8 million from the venture.

In January 2018, we invested $ 10.1 million for a 16.67 % interest in a real estate venture led by PacLife, which purchased the 1,152-key Marriott Wardman Park hotel, located adjacent to the Woodley Park Metro Station in northwest Washington, D.C.

Prior to the acquisition by this venture, the JBG Legacy Funds owned a 47.64 % interest in The Marriott Wardman Park hotel.

The JBG Legacy Funds did not receive any proceeds from the sale, as the net proceeds were used to satisfy the prior mortgage debt.

During the second quarter of 2020, we determined that our investment in the venture was impaired due to a decline in the fair value of the underlying asset and recorded an impairment loss of $ 6.5 million, which reduced the net book value of our investment to zero , and we suspended equity loss recognition for the venture after June 30, 2020.

During the year ended December 31, 2019, we recognized income of $ 6.4 million related to distributions from this venture, which was included in "Loss from unconsolidated real estate ventures, net"

in our consolidated statement of operations.

In April 2020, our real estate venture with CPPIB entered into a mortgage loan with a maximum principal balance of $ 160.0 million collateralized by 1900 N Street, and as a result, we received a distribution of $ 70.8 million from the venture during the second quarter of 2020.

In April 2021, we entered into two real estate ventures with an institutional investor advised by J.P.

Morgan, in which we have 50 % ownership interests, to design, develop, manage and own 2.0 million square feet of new mixed-use development located in Potomac Yard, the southern portion of National Landing.

Our venture partner contributed a land site that is entitled for 1.3 million square feet of development at Potomac Yard Landbay F, while we contributed cash and adjacent land with over 700,000 square feet of estimated development capacity at Potomac Yard Landbay G.

We will also act as pre-developer, developer, property manager and leasing agent for all future commercial and residential properties on the site.

We have determined the ventures are VIEs, but we are not the primary beneficiary of the VIEs and, accordingly, we have not consolidated either venture.

We recognized an $ 11.3 million gain on the land contributed to one of the real estate ventures based on the cash received and the remeasurement of our retained interest in the asset, which was included in "Gain on sale of real estate"

in our consolidated statement of operations for the year ended December 31, 2021.

As part of the transaction, our venture partner elected to accelerate the monetization of a 2013 promote interest in the land contributed by it to the ventures.

During the second quarter of 2021, the total amount of the promote paid was $ 17.5 million, of which $ 4.2 million was paid to certain of our non-employee trustees and certain of our executives.

During the second quarter of 2020, we determined that our investment in the venture that owned The Marriott Wardman Park hotel was impaired due to a decline in the fair value of the underlying asset and recorded an impairment loss of $ 6.5 million, which reduced the net book value of our investment to zero , and we suspended equity loss recognition for the venture after June 30, 2020.

On October 1, 2020, we transferred our interest in this venture to PacLife.

In August 2018, JP Morgan, our former partner in the real estate venture that owned the Investment Building, a 401,000 square foot office building located in Washington, D.C., acquired our 5.0 % interest in the venture for $ 24.6 million, resulting in a gain of $ 15.5 million, which was included in "Income (loss) from unconsolidated real estate ventures, net"

in our statement of operations for the year ended December 31, 2018.

The following is a summary of the debt of our unconsolidated real estate ventures:

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Other assets, net

Mortgages payable

Mortgages payable, net

Other liabilities, net

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Operating income (loss) (2)

Net loss (2) (3)

(1) Excludes information related to the venture that owns The Marriott Wardman Park hotel for the second half of 2020 as we suspended equity loss recognition for the venture after June 30, 2020 .

On October 1, 2020, we transferred our interest in this venture to PacLife.

(2) Includes the loss from the sale of Woodglen of $ 16.4 million and the gain from the sale of Pickett Industrial Park of $ 8.0 million recognized by our unconsolidated real estate ventures during the year ended December 31, 2020.

(3) Includes gain on sale of The Warner of $ 32.5 million recognized by our unconsolidated real estate venture with CPPIB during the year ended December 31, 2018 .

Net income (loss) (2)

(1) Excludes information related to the venture that owned The Marriott Wardman Park hotel for the second half of 2020 as we suspended equity loss recognition for the venture after June 30, 2020 .

On October 1, 2020, we transferred our interest in this venture to our venture partner.

(2) Includes the gain from the sale of Fairway, Courthouse Metro, 5615 Fishers Lane and 500 L'Enfant Plaza totaling $ 85.5 million during the year ended December 31, 2021.

Includes the impairment loss recognized by the unconsolidated real estate venture that owns the L'Enfant Plaza assets totaling $ 48.7 million during the year ended December 31, 2021.

Includes the loss from the sale of Woodglen of $ 16.4 million and the gain from the sale of Pickett Industrial Park of $ 8.0 million during the year ended December 31, 2020.

Variable Interest Entities

We hold various interests in entities deemed to be VIEs, which we evaluate at acquisition, formation, after a change in the ownership agreement, after a change in the real estate venture's economics or after any other reconsideration event to

determine if the VIEs should be consolidated in our financial statements or should no longer be considered a VIE.

Certain criteria we assess in determining whether we are the primary beneficiary of the VIE and, therefore, should consolidate the VIE include our control over significant business activities, our voting rights and the noncontrolling interest kick-out rights.

We hold various interests in entities deemed to be VIEs, which we evaluate at acquisition, formation, after a change in the ownership agreement, after a change in the entity's economics or after any other reconsideration event to determine if the VIE should be consolidated in our financial statements or should no longer be considered a VIE.

An entity is a VIE because it is in the development stage and/or does not hold sufficient equity at risk, or conducts substantially all its operations on behalf of an investor with disproportionately few voting rights.

We will consolidate a VIE if we are the primary beneficiary of the VIE, which entails having the power to direct the activities that most significantly impact the VIE's economic performance.

Certain criteria we assess in determining whether we are the primary beneficiary of the VIE include our influence over significant business activities, our voting rights, and any noncontrolling interest kick-out or participating rights.

Unconsolidated VIEs

As of December 31, 2020 and 2019, we had interests in entities deemed to be VIEs that are in the development stage and do not hold sufficient equity at risk or conduct substantially all their operations on behalf of an investor with disproportionately few voting rights.

Although we are engaged to act as the managing partner in charge of day-to-day operations of these investees, we are not the primary beneficiary of these VIEs as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's performance.

As of December 31, 2021 and 2020, we had interests in entities deemed to be VIEs.

Although we are engaged to act as the managing partner in charge of day-to-day operations of these investees, we are not the primary beneficiary of these VIEs, as we do not hold unilateral power over activities that, when taken together, most significantly impact the respective VIE's economic performance.

We account for our investment in these entities under the equity method.

As of December 31, 2021 and 2020, the net carrying amounts of our investment in these entities were $ 145.2 million and $ 116.2 million, which were included in "Investments in unconsolidated real estate ventures"

in our balance sheets.

Our equity in the income of unconsolidated VIEs is included in "Income (loss) from unconsolidated real estate ventures, net"

in our statements of operations.

in our consolidated balance sheets.

Our equity in the income of unconsolidated VIEs is included in "Loss from unconsolidated real estate ventures, net"

in our consolidated statements of operations.

Our maximum loss exposure in these entities is limited to our investments, construction commitments and debt guarantees.

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Consolidated VIEs

We consolidate a VIE when we control the significant business activities of an entity.

An entity is a VIE because it is in the development stage and/or does not hold sufficient equity at risk.

We are the primary beneficiary of a VIE because the noncontrolling interest holder does not have substantive kick-out or participating rights, and we control the significant business activities.

JBG SMITH LP is our sole consolidated VIE.

JBG SMITH LP is our most significant consolidated VIE.

We hold 89.5 % of the limited partnership interest in JBG SMITH LP, act as the general partner and exercise full responsibility, discretion and control over its day-to-day management.

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Because the noncontrolling interest holders do not have these rights, JBG SMITH LP is a VIE.

As general partner, we have the power to direct the activities of JBG SMITH LP that most significantly affect its performance, and through our majority interest, we have both the right to receive benefits from and the obligation to absorb losses of JBG SMITH LP.

As general partner, we have the power to direct the activities of JBG SMITH LP that most significantly affect its economic performance, and through our majority interest, we have both the right to receive benefits from and the obligation to absorb losses of JBG SMITH LP.

Accordingly, we are the primary beneficiary of JBG SMITH LP and consolidate it in our financial statements.

Because we conduct our business and hold our assets and liabilities through JBG SMITH LP, its total assets and liabilities comprise substantially all of our consolidated assets and liabilities.

In conjunction with the acquisition of F1RST Residences in December 2019, we entered into a like-kind exchange agreement with a third-party intermediary.

As of December 31, 2019, the third-party intermediary was the legal owner of the entity that owned this property.

We determined we were the primary beneficiary of the VIE, and accordingly, we consolidated the property and its operations as of the acquisition date.

Legal ownership of this entity was transferred to us by the third-party intermediary when the like-kind exchange agreement was completed with the sale of Metropolitan Park in January 2020.

During the second quarter of 2020, The Wren, an under-construction multifamily asset in Washington, D.C.

that we own through a consolidated real estate venture, which we had deemed to be a VIE, began placing units into service and commenced operations.

We no longer deemed the real estate venture to be a VIE because it was determined to have sufficient equity to finance its activities without additional support.

See Note 12 for additional information.

In conjunction with the acquisition of The Batley in November 2021, we entered into an agreement with a third-party intermediary to facilitate a like-kind exchange.

As a result, the third-party intermediary was the legal owner of the entity that owned this property as of December 31, 2021.

We determined that the entity that owns the Batley was a VIE, and we are the primary beneficiary of the VIE.

We consolidated the property and its operations as of the acquisition date.

Legal ownership of this entity will be transferred to us by the third-party intermediary when the like-kind exchange agreement is completed with the sale of Pen Place, which we expect to close during the second quarter of 2022.

As of December 31, 2021, the VIE had total assets, consisting of primarily real estate, and liabilities of $ 207.2 million and $ 792,000 .

In March 2021, we leased the land underlying 1900 Crystal Drive located in National Landing to a lessee, which plans to construct an 808 -unit multifamily asset comprising two towers with ground floor retail.

The ground lessee has engaged us to be the development manager for the construction of 1900 Crystal Drive, and separately, we are the lessee in a master lease of the asset.

We have an option to acquire the asset until a specified period after completion.

In March 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $ 227.0 million and an interest rate of LIBOR plus 3.0 % per annum.

As of December 31, 2021, no proceeds had been received from the mortgage loan.

In connection with the mortgage loan, we have guaranteed the completion of the asset

and provided certain non-recourse carve-outs (e.g., guarantees against fraud, misrepresentation, bankruptcy and certain environmental liabilities).

The ground lessee invested $ 17.5 million of equity funding and we are obligated to provide additional project funding through a mezzanine loan to the ground lessee estimated at $ 104.8 million, of which $ 34.9 million has been funded as of December 31, 2021.

We determined that 1900 Crystal Drive is a VIE and that we are the primary beneficiary of the VIE.

Accordingly, we consolidate the VIE with the lessee's ownership interest shown as "Noncontrolling interests"

in our consolidated balance sheet.

The aforementioned ground lease, the mezzanine loan and the master lease are eliminated in consolidation.

As of December 31, 2021, the VIE had total assets, consisting of primarily construction in process, and liabilities of $ 58.6 million and $ 12.0 million.

The assets of the VIE can only be used to settle the obligations of the VIE, and the liabilities include third-party liabilities of the VIE for which the creditors or beneficial interest holders do not have recourse against us.

In December 2021, we leased the land underlying 2000 South Bell Street and 2001 South Bell Street ("2000/2001 South Bell Street") located in National Landing to a lessee, which plans to construct a 775 -unit multifamily asset comprising two towers with ground floor retail.

The ground lessee has engaged us to be the development manager for the construction of 2000/2001 South Bell Street, and separately, we are the lessee in a master lease of the asset.

We have an option to acquire the asset until a specified period after completion.

In December 2021, the ground lessee entered into a mortgage loan collateralized by the leasehold interest with a maximum principal balance of $ 208.5 million and an interest rate of LIBOR plus 2.15 % per annum.

As of December 31, 2021, no proceeds had been received from the mortgage loan.

In connection with the mortgage loan, we have guaranteed the completion of the asset and provided certain non-recourse carve-outs (e.g., guarantees against fraud, misrepresentation, bankruptcy and certain environmental liabilities).

The ground lessee is obligated to invest $ 16.0 million of equity funding, of which $ 6.7 million was funded as of December 31, 2021, and we are obligated to provide additional project funding through a mezzanine loan to the ground lessee, estimated at $ 96.2 million, none of which has been funded as of December 31, 2021.

We determined that 2000/2001 South Bell Street is a VIE and that we are the primary beneficiary of the VIE.

Accordingly, we consolidate the VIE with the lessee's ownership interest shown as "Noncontrolling interests"

in our consolidated balance sheet.

The aforementioned ground lease, the mezzanine loan and the master lease are eliminated in consolidation.

As of December 31, 2021, the VIE had total assets and liabilities of $ 3.9 million and $ 1.1 million.

Other Assets, Net

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Lease intangible assets, net

Other identified intangible assets, net

Other identified intangible assets

Wireless spectrum licenses (1)

Operating lease right-of-use assets

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Prepaid expenses

Deferred financing costs on credit facility, net

Deferred financing costs, net

Total other assets, net

(1) Related to an amendment of the ground lease for 1730 M Street executed during the year ended December 31, 2020.

The amendment extended the expiration date of the lease from April 2061 to December 2118, and resulted in a change in its classification from an operating to a finance lease.

(2) Includes deposits totaling $ 25.3 million with the Federal Communications Commission in connection with the acquisition of wireless spectrum licenses.

(1) During 2020, we deposited $ 25.3 million with the Federal Communications Commission in connection with the acquisition of wireless spectrum licenses.

In March 2021, we received the licenses.

(2) Includes $ 139.4 million as of December 31, 2021 related to the amendment of the ground lease for Courthouse Plaza 1 and 2, which was executed in December 2021.

The amendment extended the expiration date of the lease from January 2062 to December 2119, and resulted in a change in its classification from an operating lease to a finance lease.

(3) As of December 31, 2021, included $ 9.8 million of investments in funds, which invest in real estate focused technology companies, that are recorded at their fair value based on their reported NAV.

During the fourth quarter of 2021, we recorded unrealized gains totaling $ 4.6 million related to these investments, which are included in "Interest and other income (loss), net"

in our consolidated statement of operations .

The following is a summary of the composition of deferred leasing costs, lease intangible assets and other identified intangible assets:

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Above-market real estate lease amortization (2)

Below-market ground lease amortization (3)

Management and leasing contract amortization (1)

Other amortization

Total lease and management and leasing contract amortization expense

Total amortization expense related to lease and other identified intangible assets

(1) Amounts are included in "Depreciation and amortization expense"

in our statements of operations.

in our consolidated statements of operations.

(2) Amounts are included in "Property rental revenue"

in our statements of operations.

(3) Amounts are included in "Property operating expenses"

in our statements of operations.

in our consolidated statements of operations.

The following is a summary of the estimated amortization related to lease and other identified intangible assets for the next five years and thereafter as of December 31, 2021:

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(In thousands)

(1) Estimated amortization related to the option to enter into ground lease is not included within the amortization table above as the ground lease does not have a definite start date .

(1) Estimated amortization related to the option to enter into ground lease is excluded from the amortization table above as the ground lease does not have a definite start date .

Estimated amortization related to wireless spectrum licenses is excluded from the amortization table above as they are indefinite-lived.

Mortgages Payable

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(1) Weighted average effective interest rate as of December 31, 2021.

(2) Includes variable rate mortgage payable with interest rate cap agreements as of December 31, 2020.

(2) Includes variable rate mortgages payable with interest rate cap agreements.

(3) Includes variable rate mortgages payable with interest rates fixed by interest rate swap agreements .

As of December 31, 2020 and 2019, the net carrying value of real estate collateralizing our mortgages payable totaled $ 1.8 billion and $ 1.4 billion.

(4) As of December 31, 2021, excludes $ 6.4 million of net deferred financing costs related to unfunded mortgage loans that were included in "Other assets, net."

As of December 31, 2021 and 2020, the net carrying value of real estate collateralizing our mortgages payable totaled $ 1.8 billion.

Our mortgages payable contain covenants that limit our ability to incur additional indebtedness on these properties and, in certain circumstances, require lender approval of tenant leases and/or yield maintenance upon repayment prior to maturity.

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We were not in default under any mortgage loan as of December 31, 2021.

During the year ended December 31, 2021, we entered into two separate mortgage loans with an aggregate principal balance of $ 190.0 million, collateralized by 1225 S.

Clark Street and 1215 S.

Clark Street.

During the year ended December 31, 2020, we entered into four separate mortgage loans with an aggregate principal balance of $ 560.0 million, collateralized by 4747 Bethesda Avenue, The Bartlett, 1221 Van Street and 220 20th Street, and refinanced the mortgage payable collateralized by RTC-West, increasing the principal balance by $ 20.2 million.

In December 2020, we repaid the mortgage payable collateralized by WestEnd25 with a principal balance of $ 94.7 million.

During the year ended December 31, 2019, aggregate borrowings under mortgages payable totaled $ 2.2 million related to construction draws.

During the year ended December 31, 2019, we repaid mortgages payable with an aggregate principal balance of $ 709.1 million.

The loss on the extinguishment of debt was $ 5.8 million for the year ended December 31, 2019, of which $ 2.9 million related to our repayment of various mortgages payable and $ 2.9 million related to the termination of various interest rate swaps in connection with the repayment of the loan encumbering Central Place Tower.

As of December 31, 2020 and 2019, we had various interest rate swap and cap agreements on certain of our mortgages payable with an aggregate notional value of $ 1.3 billion and $ 867.6 million.

During the year ended December 31, 2020, we entered into various interest rate cap agreements on certain of our mortgages payable with an aggregate notional value of $ 560.0 million.

During the year ended December 31, 2019, in connection with the repayment of the loan encumbering Central Place Tower, we terminated various interest rate swaps with an aggregate notional value of $ 220.0 million.

As of December 31, 2021 and 2020, we had various interest rate swap and cap agreements on certain of our mortgages payable with an aggregate notional value of $ 1.3 billion.

See Note 17 for additional information.

Credit Facility

As of December 31, 2020, our $ 1.4 billion credit facility consisted of a $ 1.0 billion revolving credit facility maturing in January 2025, a $ 200.0 million unsecured term loan ("Tranche A-1 Term Loan") maturing in January 2023 and a $ 200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024.

Based on the terms as of December 31, 2020, the interest rate for the credit facility varies based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets and ranges (i) in the case of the revolving credit facility, effective January 2020, from LIBOR plus 1.05 % to LIBOR plus 1.50 %, (ii) in the case of the Tranche A-1 Term Loan, from LIBOR plus 1.20 % to LIBOR plus 1.70 % and (iii) in the case of the Tranche A-2 Term Loan, from LIBOR plus 1.15 % to LIBOR plus 1.70 %.

As of December 31, 2021 and 2020, our $ 1.4 billion credit facility consisted of a $ 1.0 billion revolving credit facility maturing in January 2025, a $ 200.0 million unsecured term loan ("Tranche A-1 Term Loan") maturing in January 2023 and a $ 200.0 million unsecured term loan ("Tranche A-2 Term Loan") maturing in July 2024.

Based on the terms as of December 31, 2021, the interest rate for the credit facility varies based on a ratio of our total outstanding indebtedness to a valuation of certain real property and assets, and ranges (i) in the case of the revolving credit facility from LIBOR plus 1.05 % to LIBOR plus 1.50 %, (ii) in the case of the Tranche A-1 Term Loan, from LIBOR plus 1.20 % to LIBOR plus 1.70 % and (iii) in the case of the Tranche A-2 Term Loan, from LIBOR plus 1.15 % to LIBOR plus 1.70 %.

There are various LIBOR options in the credit facility, and we elected the one-month LIBOR option as of December 31, 2021.

We were not in default under our credit facility as of December 31, 2021.

Effective as of January 14,

2022, the Tranche A-1 Term Loan was amended to extend the maturity date to January 2025 with two one-year extension options, and to amend the interest rate to Secured Overnight Financing Rate ("SOFR") plus 1.05 % to SOFR plus 1.65 %, in each case including a credit spread adjustment.

In connection with the loan amendment, we amended the related LIBOR-based interest rate swaps, extending the maturity to July 2024 and converting the hedged rate from one-month LIBOR to one-month SOFR.

The following is a summary of amounts outstanding under the credit facility:

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(1) Effective interest rate as of December 31, 2021.

(2) As of both December 31, 2020 and 2019, letters of credit with an aggregate face amount of $ 1.5 million were outstanding under our revolving credit facility.

(3) As of December 31, 2020 and 2019, net deferred financing costs related to our revolving credit facility totaling $ 6.7 million and $ 3.1 million were included in "Other assets, net."

(2) As of December 31, 2021 and 2020, letters of credit with an aggregate face amount of $ 911,000 and $ 1.5 million were outstanding under our revolving credit facility.

(3) As of December 31, 2021 and 2020, excludes net deferred financing costs related to our revolving credit facility of $ 5.0 million and $ 6.7 million that were included in "Other assets, net."

(4) The interest rate for the revolving credit facility excludes a 0.15 % facility fee.

(5) As of December 31, 2020 and 2019, $ 200.0 million and $ 100.0 million of the outstanding balance was fixed by interest rate swap agreements.

As of December 31, 2020, the interest rate swaps mature concurrently with the term loan and provide a weighted average interest rate of 1.39 % .

(6) As of December 31, 2020 and 2019, $ 200.0 million and $ 137.6 million of the outstanding balance was fixed by interest rate swap agreements.

As of December 31, 2020, the interest rate swaps mature concurrently with the term loan and provide a weighted average interest rate of 1.34 % .

(5) As of December 31, 2021 and 2020, the outstanding balance was fixed by interest rate swap agreements.

As of December 31, 2021, the interest rate swaps mature concurrently with the respective term loan and fix LIBOR at a weighted average interest rate of 1.39 % for the Tranche A-1 Term Loan and 1.34 % for the Tranche A-2 Term Loan.

Principal Maturities

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Environmental liabilities

Net deferred tax liability

Deferred tax liability, net

Dividends payable

2 unchanged sentences

Total other liabilities, net

(1) Related to an amendment of the ground lease for 1730 M Street executed during the year ended December 31, 2020.

The amendment extended the expiration date of the lease from April 2061 to December 2118, and resulted in a change in its classification from an operating to a finance lease .

(2) Deferred purchase price associated with the acquisition of the Americana Hotel.

(1) Includes $ 121.6 million as of December 31, 2021 related to the amendment of the ground lease for Courthouse Plaza 1 and 2, which was executed in December 2021.

The amendment extended the expiration date of the lease from January 2062 to December 2119, and resulted in a change in its classification from an operating lease to a finance lease.

(2) Deferred purchase price associated with the acquisition of the former Americana Hotel site.

See Note 3 for additional information.

Amortization expense included in "Property rental revenue"

in our statements of operations related to lease intangible liabilities for each of the three years in the period ended December 31, 2020 was $ 2.0 million, $ 2.5 million and $ 2.6 million.

in our consolidated statements of operations related to lease intangible liabilities for each of the three years in the period ended December 31, 2021 was $ 2.2 million, $ 2.0 million and $ 2.5 million.

The following is a summary of the estimated amortization of lease intangible liabilities for the next five years and thereafter as of December 31, 2021:

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We have elected to be taxed as a REIT, and accordingly, we have incurred no federal income tax expense related to our REIT subsidiaries except for our TRSs.

Our financial statements include the operations of our TRSs, which are subject to federal, state and local income taxes on their taxable income.

As a REIT, we may also be subject to federal excise taxes if we engage in certain types of transactions.

Our consolidated financial statements include the operations of our TRSs, which are subject to federal, state and local income taxes on their taxable income.

As a REIT, we may also be subject to federal excise taxes if we engage in certain

types of transactions.

Continued qualification as a REIT depends on our ability to satisfy the REIT distribution tests, stock ownership requirements and various other qualification tests.

As of December 31, 2020, our TRSs have an estimated federal and state NOL of approximately $ 11.0 million.

The net basis of our assets and liabilities for tax reporting purposes is approximately $ 168.0 million higher than the amounts reported in our balance sheet as of December 31, 2020.

The following is a summary of our income tax benefit:

Our TRSs have estimated federal and state net operating loss (“NOL”) carry forwards of $ 4.8 million and $ 11.0 million as of December 31, 2021 and 2020, all of which are subject to limitations.

The net basis of our assets and liabilities for tax reporting purposes is approximately $ 297.0 million higher than the amounts reported in our consolidated balance sheet as of December 31, 2021.

The following is a summary of our income tax (expense) benefit:

Year Ended December 31,

(In thousands)

Current tax benefit (expense)

Deferred tax benefit

Income tax benefit

As of December 31, 2020 and 2019, we have a net deferred tax liability of $ 2.5 million and $ 5.5 million primarily related to the management and leasing contracts assumed in the Combination, partially offset by deferred tax assets associated

with tax versus book differences, related general and administrative expenses and the NOL remaining from 2019, 2018 and 2017.

We are subject to federal, state and local income tax examinations by taxing authorities for 2017 through 2020.

Current tax (expense) benefit

Deferred tax (expense) benefit

Income tax (expense) benefit

As of December 31, 2021 and 2020, we have a net deferred tax liability of $ 5.3 million and $ 2.5 million primarily related to the management and leasing contracts assumed in the Combination, partially offset by deferred tax assets associated with tax versus book differences, related general and administrative expenses and the NOL carry forward from 2020 and 2019, as well as NOLs converted from charitable contribution carry forwards from 2021 and 2020.

We are subject to federal, state and local income tax examinations by taxing authorities for the tax years ending in 2018 through 2021.

(In thousands)

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Basis difference - real estate

Basis difference - investments

Total deferred tax liabilities

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During the year ended December 31, 2020, our Board of Trustees declared cash dividends totaling $ 0.90 of which $ 0.489 was taxable as ordinary income for federal income tax purposes and $ 0.411 were capital gain distributions.

During the year ended December 31, 2018, our Board of Trustees declared cash dividends totaling $ 1.00 (regular dividends of $ 0.90 per common share and a special dividend of $ 0.10 per common share) of which $ 0.531 was taxable as ordinary income for federal income tax purposes and $ 0.469 were capital gain distributions.

During the year ended December 31, 2019, our Board of Trustees declared cash dividends totaling $ 0.90 of which $ 0.468 was taxable as ordinary income for federal income tax purposes and $ 0.432 were capital gain distributions.

Redeemable Noncontrolling Interests

Op Units held by persons other than JBG SMITH are redeemable for cash or, at our election, our common shares, subject to certain limitations.

During the years ended December 31, 2020 and 2019, unitholders redeemed 1.3 million and 1.7 million OP Units, which we elected to redeem for an equivalent number of our common shares.

As of December 31, 2020, outstanding OP Units totaled 13.8 million, representing a 9.5 % ownership interest in JBG SMITH LP.

On our balance sheets, our OP Units and certain vested LTIPs are presented at the higher of their redemption value or their carrying value, with such adjustments recognized in "Additional paid-in capital."

Vested LTIP Units are redeemable into OP Units and, in turn cash or, at our election, our common shares, subject to certain limitations.

During the years ended December 31, 2021 and 2020, unitholders redeemed 906,126 and 1.3 million OP Units and LTIP Units, which we elected to redeem for an equivalent number of our common shares.

As of December 31, 2021, outstanding OP Units and redeemable LTIP Units totaled 14.9 million, representing a 10.5 % ownership interest in JBG SMITH LP.

In our consolidated balance sheets, our OP Units and certain vested LTIP Units are presented at the higher of their redemption value or their carrying value, with adjustments to the redemption value recognized in "Additional paid-in capital."

Redemption value per OP Unit is equivalent to the market value of one of our common shares at the end of the period.

In 2021, as of the date of this filing, unitholders redeemed 93,978 OP Units, which we elected to redeem for an equivalent number of our common shares.

In 2022, as of the date of this filing, unitholders redeemed 205,455 OP Units and LTIP Units, which we elected to redeem for an equivalent number of our common shares.

Consolidated Real Estate Venture

We are a partner in a consolidated real estate venture that owns a multifamily asset located in Washington, D.C.

Pursuant to the terms of the real estate venture agreement, we will fund all capital contributions until our ownership interest reaches a maximum of 97.0 %.

We are a partner in The Wren, a consolidated real estate venture that owns a multifamily asset located in Washington, D.C.

Pursuant to the terms of the real estate venture agreement, we are obligated to fund all capital contributions until our ownership interest reaches a maximum of 97.0 %.

Our partner can redeem its interest for cash under certain conditions.

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(In thousands)

Balance as of the beginning of the year

Balance, beginning of period

OP Unit redemptions

LTIP Units issued in lieu of cash bonuses (1)

Net income (loss) attributable to redeemable noncontrolling interests

Other comprehensive loss

Contributions (distributions)

Net loss attributable to redeemable noncontrolling interests

Other comprehensive income (loss)

Distributions

Share-based compensation expense

Adjustment to redemption value

Balance as of the end of the year

Balance, end of period

(1) See Note 13 for additional information.

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Share-Based Payments and Employee Benefits

The acquisition of JBG/Operating Partners, L.P.

in the Combination resulted in the issuance of 3.3 million OP Units to the former owners with an estimated grant-date fair value of $ 110.6 million.

The OP Units are subject to post-combination vesting over periods of either 12 or 60 months based on continued employment.

Compensation expense for these OP Units is recognized over the graded vesting period.

Certain OP Units issued in the Combination to the former owners of JBG/Operating Partners, L.P.

are subject to post-combination vesting over a period of 60 months based on continued employment.

Compensation expense for these OP Units is recognized over the graded vesting period through July 2022.

The following is a summary of the OP Units activity:

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On June 23, 2017, our Board of Trustees adopted the JBG SMITH 2017 Omnibus Share Plan (the "Plan"), effective as of July 17, 2017, and authorized the reservation of 10.3 million of our common shares pursuant to the Plan.

In April 2021, our shareholders approved an amendment to the Plan to increase the common shares reserved under the Plan by 8.0 million.

As of December 31, 2021, there were 8.9 million common shares available for issuance under the Plan.

Formation Awards

Pursuant to the Plan, on July 18, 2017, we granted 2.7 million formation awards ("Formation Awards") based on an aggregate notional value of approximately $ 100 million divided by the volume-weighted average price on July 18, 2017 of $ 37.10 per common share.

In 2018, we granted 93,784 Formation Awards based on the volume-weighted average price on the date of issuance of $ 34.40 per common share.

The Formation Awards are structured in the form of profits interests in JBG SMITH LP that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the volume-weighted average price of a common share at the time the formation unit was granted.

The Formation Awards, subject to certain conditions, generally vest 25 % on each of the third and fourth anniversaries and 50 % on the fifth anniversary, of the date granted, subject to continued employment with JBG SMITH through each vesting date.

The formation awards issued in the Combination ("Formation Awards") were structured in the form of profits interests in JBG SMITH LP that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the volume-weighted average price of a common share at the time the formation unit was granted.

The Formation Awards, subject to certain conditions, generally vest 25 % on each of the third and fourth anniversaries and 50 % on the fifth anniversary of the date granted, subject to continued employment.

Compensation expense for these awards is being recognized over a five-year period through July 2022.

The value of vested Formation Awards is realized through conversion of the award into a number of LTIP Units, and subsequent conversion into a number of OP Units determined based on the difference between the volume-weighted average price of a common share at the time the Formation Award was granted and the value of a common share on the conversion date.

The conversion ratio between Formation Awards and OP Units, which starts at zero, is the quotient of:

The conversion ratio between Formation Awards and LTIP Units, which starts at zero, is the quotient of:

(i) the excess of the value of a common share on the conversion date above the per share value at the time the Formation Award was granted over (ii) the value of a common share as of the date of conversion.

Like options, Formation Awards have a finite 10-year term over which their value is allowed to increase and during which they may be converted into LTIP Units (and in turn, OP Units).

Holders of Formation Awards will not receive distributions or allocations of net income (net loss) prior to vesting and conversion to LTIP Units.

The aggregate grant-date fair value of the Formation Awards granted during the year ended December 31, 2018 was $ 725,000 estimated using Monte Carlo simulations.

No Formation Awards were granted during the years ended December 31, 2020 and 2019.

Compensation expense for these awards is being recognized over a five-year period.

The following is a summary of the significant assumptions used to value the Formation Awards:

December 31, 2018

Expected volatility

27.0 % to 29.0 %

Dividend yield

2.5 % to 2.7 %

Risk-free interest rate

2.8 % to 3.0 %

Expected life

Formation Awards have a finite 10-year term over which their value is allowed to increase and during which they may be converted into LTIP Units (and in turn, OP Units).

Holders of Formation Awards will not receive distributions or allocations of net income (net loss) prior to conversion to LTIP Units.

The following is a summary of the Formation Awards activity:

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Unvested as of December 31, 2021

The total-grant date fair value of the Formation Awards that vested for each of the three years in the period ended December 31, 2020 was $ 6.9 million, $ 1.4 million and $ 333,000 .

LTIP, Time-Based LTIP and Special Time-Based LTIP Units

During each of the three years in the period ended December 31, 2020, as part of their annual compensation, we granted a total of 54,607 , 50,159 and 25,770 fully vested LTIP Units to non-employee trustees with an aggregate grant-date fair value of $ 1.5 million, $ 1.8 million and $ 794,000 .

The LTIP Units may not be sold while such non-employee trustee is serving on the Board.

During each of the three years in the period ended December 31, 2020, we granted 381,504 , 351,982 and 367,519 Time-Based LTIP Units to certain employees with a weighted average grant-date fair value of $ 38.52 , $ 34.26 and $ 31.48 per unit that vest over four years , 25.0 % per year, subject to continued employment.

The total-grant date fair value of the Formation Awards that vested for each of the three years in the period ended December 31, 2021 was $ 6.0 million, $ 6.9 million and $ 1.4 million.

Time-Based LTIP Units, LTIP Units and Special Time-Based LTIP Units

During each of the three years in the period ended December 31, 2021, we granted to certain employees 498,955 , 381,504 and 351,982 LTIP Units with time-based vesting requirements ("Time-Based LTIP Units") with a weighted average grant-date fair value of $ 29.21 , $ 38.52 and $ 34.26 per unit that primarily vest over four years subject to continued employment.

Compensation expense for these units is being recognized over a four-year period.

During the years ended December 31, 2020 and 2019, we granted 90,094 and 91,636 of fully vested LTIP Units, with a grant-date fair value of $ 40.13 and $ 34.21 per unit, to certain executives who elected to receive all or a portion of their cash bonus paid in the subsequent year related to past service in the form of fully vested LTIP Units.

Additionally, during the year ended December 31, 2018, related to our successful pursuit of Amazon's new headquarters in National Landing, we granted 356,591 Special Time-Based LTIP Units to certain employees with a weighted average grant-date fair value of $ 36.84 per unit.

The Special Time-Based LTIP Units vest 50 % on each of the fourth and fifth anniversaries of the grant date, subject to continued employment.

Compensation expense for these units is being recognized over a five-year period.

The aggregate grant-date fair value of the LTIP, Time-Based LTIP and Special Time-Based LTIP Units granted (collectively "Granted LTIPs") for each of the three years in the period ended December 31, 2020 was $ 19.9 million, $ 17.0 million and $ 25.5 million, valued using Monte Carlo simulations.

Holders of the Granted LTIPs have the right to convert all or a portion of vested units into OP Units, which are then subsequently exchangeable for our common shares.

Granted LTIPs do not have redemption rights, but any OP Units into which units are converted are entitled to redemption rights.

Granted LTIPs, generally, vote with the OP Units and do not have any separate voting rights except in connection with actions that would materially and adversely affect the rights of the Granted LTIPs.

The following is a summary of the significant assumptions used to value the Granted LTIPs:

Additionally, in July 2021, we granted to certain employees as part of a long-term retention incentive award 608,325 Time-Based LTIP Units with a weighted average grant-date fair value of $ 31.73 per unit that vest 50 % on the fifth anniversary of the grant date and 25 % on each of the sixth and seventh anniversaries of the grant date, subject to continued employment.

Compensation expense for these units is being recognized over a seven-year period.

During each of the three years in the period ended December 31, 2021, we granted 163,065 , 90,094 and 91,636 fully vested LTIP Units to certain employees, who elected to receive all or a portion of their cash bonus, related to prior service, as LTIP Units.

The LTIP Units had a grant-date fair value of $ 29.54 , $ 40.13 and $ 34.21 per unit.

During each of the three years in the period ended December 31, 2021, as part of their annual compensation, we granted to non-employee trustees a total of 71,792 , 54,607 and 50,159 fully vested LTIP Units with a grant-date fair value of $ 26.31 , $ 28.38 and $ 36.28 .

The LTIP Units may not be sold while a trustee is serving on the Board of Trustees.

The aggregate grant-date fair value of the Time-Based LTIP Units and LTIP Units granted (collectively "Granted LTIPs") for each of the three years in the period ended December 31, 2021 was $ 40.6 million, $ 19.9 million and $ 17.0 million.

Holders of the Granted LTIPs and the Time-Based LTIP Units issued in 2018 related to our successful pursuit of Amazon's new headquarters ("Special Time-Based LTIP Units") have the right to convert vested units into OP Units, which are then subsequently exchangeable for our common shares.

Granted LTIPs and Special Time-Based LTIP Units do not have redemption rights, but any OP Units into which units are converted are entitled to redemption rights.

Granted LTIPs and Special Time-Based LTIP Units, generally, vote with the OP Units and do not have any separate voting rights except in connection with actions that would materially and adversely affect the rights of the Granted LTIPs and Special Time-Based LTIP Units.

The Granted LTIPs were valued based on the closing common share price on the date of grant, less a

discount for post-grant restrictions.

The discount was determined using Monte Carlo simulations, and the following is a summary of the significant assumptions used to value the Granted LTIPs:

Year Ended December 31,

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Post-grant restriction periods

The following is a summary of the Granted LTIP activity:

The following is a summary of the Granted LTIPs and Special Time-Based LTIP Units activity:

Average Grant-

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Unvested as of December 31, 2021

The total-grant date fair value of the Granted LTIPs that vested for each of the three years in the period ended December 31, 2020 was $ 15.3 million, $ 12.0 million and $ 3.6 million.

Performance-Based LTIP and Special Performance-Based LTIP Units

During each of the three years in the period ended December 31, 2020, we granted 593,100 , 478,411 and 567,106 Performance-Based LTIP Units to certain employees.

During the year ended December 31, 2018, related to our successful pursuit of Amazon's new headquarters at our properties in National Landing, we granted 511,555 Special Performance-Based LTIP Units to certain employees.

Performance-Based LTIP Units, including the Special Performance-Based LTIP Units, are performance-based equity compensation pursuant to which participants have the opportunity to earn LTIP Units based on the relative performance of the total shareholder return ("TSR") of our common shares compared to the companies in the FTSE NAREIT Equity Office Index, over the defined performance period beginning on the grant date, inclusive of dividends and stock price appreciation.

The total-grant date fair value of the Granted LTIPs and Special Time-Based LTIP Units that vested for each of the three years in the period ended December 31, 2021 was $ 19.1 million, $ 15.3 million and $ 12.0 million.

Performance-Based LTIP Units

During each of the three years in the period ended December 31, 2021, we granted to certain employees 627,874 , 593,100 and 478,411 LTIP Units with performance-based vesting requirements ("Performance-Based LTIP Units") with a weighted average grant-date fair value of $ 15.14 , $ 18.67 and $ 19.49 per unit.

Performance-Based LTIP Units are performance-based equity compensation pursuant to which participants have the opportunity to earn LTIP Units based on the relative performance of the total shareholder return ("TSR") of our common shares compared to the companies in the FTSE Nareit Equity Office Index, over the defined performance period beginning on the grant date, inclusive of dividends and stock price appreciation.

Our Performance-Based LTIP Units have a three-year performance period.

50 % of any Performance-Based LTIP Units that are earned vest at the end of the three-year performance period and the remaining 50 % vest on the fourth anniversary of the date of grant, subject to continued employment.

If, however, the Performance-Based LTIP Units do not achieve a positive absolute TSR at the end of the three-year performance period, but achieve at least the threshold level of the relative performance criteria thereof, 50 % of the units that otherwise could have been earned will be forfeited, and the remaining 50 % will be earned and vest if and when we achieve a positive absolute TSR during the succeeding seven years , measured at the end of each quarter .

During the year ended December 31, 2020, the three-year performance period ended for the Performance-Based LTIP Units granted on August 1, 2017.

Based on our relative and absolute TSR over the three-year performance period, 50 % of the units granted were forfeited, and the remaining 50 % of the units became earned and vested following achievement of positive absolute TSR on December 31, 2020.

In January 2021, the three-year performance period ended for the Performance-Based LTIP Units granted on February 2, 2018.

Based on our relative performance and absolute TSR over the three-year performance period, 100 % of the units granted were earned.

The aggregate grant-date fair value of the Performance-Based LTIP and Special Performance-Based LTIP Units granted for each of the three years in the period ended December 31, 2020 was $ 11.1 million, $ 9.3 million and $ 21.1 million, valued using Monte Carlo simulations.

Compensation expense for the Performance-Based LTIP Units is being recognized over a four-year period, while compensation expense for the Special Performance Based LTIP Units is being recognized over a five-year period.

The following is a summary of the significant assumptions used to value both the Performance-Based LTIP and Special Performance-Based LTIP Units:

If, however, the Performance-Based LTIP Units do not achieve a positive absolute TSR at the end of the three-year performance period, but achieve at least the threshold level of the relative performance criteria thereof, 50 % of the units that otherwise could have been earned will be forfeited, and the remaining units that are earned will vest if and when we achieve a positive TSR during the succeeding seven years , measured at the end of each quarter .

Compensation expense for these units is generally being recognized over a four-year period.

Additionally, in July 2021, we granted to certain employees as part of a long-term retention incentive award 844,070 Performance-Based LTIP Units with a weighted average grant-date fair value of $ 23.08 per unit that vest 50 % on the fifth anniversary of the grant date and 25 % on each of the sixth and seventh anniversaries of the grant date, subject to continued employment, based on our achievement of four share price targets during the performance period commencing on the first

anniversary of the grant date and ending on the sixth anniversary of the grant date.

Compensation expense for these units is being recognized over a seven-year period.

The aggregate grant-date fair value of the Performance-Based LTIP Units granted for each of the three years in the period ended December 31, 2021 was $ 29.0 million, $ 11.1 million and $ 9.3 million, valued using Monte Carlo simulations.

The following is a summary of the significant assumptions used to value the Performance-Based LTIP Units:

Year Ended December 31,

Expected volatility

19.0 % to 23.0 %

31.0 % - 34.0 %

19.0 % to 23.0 %

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2.3 % to 2.5 %

2.5 % to 2.7 %

Risk-free interest rate

2.3 % to 2.6 %

0.2 % - 1.0 %

2.3 % to 2.6 %

The following is a summary of both the Performance-Based LTIP and Special Performance-Based LTIP Units activity:

The following is a summary of the Performance-Based LTIP activity:

Average Grant-

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Unvested as of December 31, 2021 (3)

The total-grant date fair value of both the Performance-Based LTIP and Special Performance-Based LTIP Units that vested for the year ended December 31, 2020 was $ 4.6 million.

JBG SMITH 2017 ESPP

The JBG SMITH 2017 ESPP authorized the issuance of up to 2.1 million common shares.

The ESPP provides eligible employees an option to purchase up to $ 25,000 in any calendar year, through payroll deductions, of our common shares at a discount of 15.0 % of the closing price of a common share on relevant determination dates.

The maximum aggregate number of common shares reserved for issuance under the ESPP will automatically increase on January 1 of each year, unless the Compensation Committee of the Board of Trustees determines to limit any such increase, by the lesser of:

(i) 0.10 % of the total number of outstanding common shares on December 31 of the preceding calendar year or (ii) 206,600 common shares.

Pursuant to the ESPP, employees purchased 68,047 , 47,022 and 20,178 common shares for $ 1.7 million, $ 1.5 million and $ 597,000 during each of the three years in the period ended December 31, 2020.

(1) Primarily represents the Performance-Based LTIP Units granted in February 2018.

Based on our relative performance and absolute TSR over the three-year performance period, all of the outstanding units were earned, with half of the units vesting at the end of the performance period and the remaining half vesting in February 2022.

(2) Includes 506,182 Performance-Based LTIP Units issued in 2018 related to our successful pursuit of Amazon’s new headquarters ("Special Performance-Based LTIP Units") that were forfeited in November 2021 as the performance measures were not met.

(3) In January 2022, 469,624 Performance-Based LTIP Units, which were unvested as of December 31, 2021, were forfeited as the performance measures were not met .

The total-grant date fair value of the Performance-Based LTIP that vested for the year ended December 31, 2021 and 2020 was $ 5.1 million and $ 4.6 million.

In January 2021, we granted to certain non-executive employees 22,194 RSUs with time-based vesting requirements ("Time-Based RSUs") with a weighted average grant-date fair value of $ 31.52 per unit and 13,516 RSUs with performance-based vesting requirements ("Performance-Based RSUs") with a weighted average grant-date fair value of $ 15.16 per unit.

Vesting requirements and compensation expense recognition for the Time-Based RSUs and the Performance-Based RSUs are similar to those of the Time-Based LTIP Units and Performance-Based LTIP Units granted in 2021.

The aggregate grant-date fair value of the RSUs granted during the year ended December 31, 2021 was $ 905,000 .

The Time-Based RSUs were valued based on the closing common share price on the date of grant and the Performance-Based RSUs were valued using Monte Carlo simulations with the same significant assumptions used to value the Performance-Based LTIP Units above.

The following is a summary of the RSUs activity:

Time-Based RSUs

Performance-Based RSUs

Average Grant-

Date Fair Value

Unvested as of December 31, 2020

Unvested as of December 31, 2021

The ESPP authorized the issuance of up to 2.1 million common shares.

The ESPP provides eligible employees an option to contribute up to $ 25,000 in any calendar year, through payroll deductions, toward the purchase of our common shares at a discount of 15.0 % of the closing price of a common share on relevant determination dates.

As of December 31, 2021, there were 1.9 million common shares available for issuance under the ESPP.

Pursuant to the ESPP, employees purchased 64,321 , 68,047 and 47,022 common shares for $ 1.6 million, $ 1.7 million and $ 1.5 million during each of the three years in the period ended December 31, 2021.

The following is a summary of the significant assumptions used to value the ESPP common shares using the Black-Scholes model:

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13.0 % to 67.0 %

18.0 % to 28.0 %

Dividend yield

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1.1 % to 3.3 %

2.6 % to 3.5 %

Risk-free interest rate

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Expected life

As of December 31, 2020, there were 1.9 million common shares available for issuance under the ESPP.

Share-Based Compensation Expense

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Formation Awards

LTIP Units (2)

Special Performance-Based LTIP Units (3)

Special Time-Based LTIP Units (3)

OP Units and LTIP Units (2)

Special Time-Based LTIP Units and Special Performance-Based LTIP Units

Share-based compensation related to Formation Transaction and special equity awards (3)

Total share-based compensation expense

Less amount capitalized

amount capitalized

Share-based compensation expense

(1) Primarily comprising compensation expense for certain executives who have elected to receive all or a portion of any cash bonus that may be paid in the subsequent year related to past service in the form of fully vested LTIP Units and related to our ESPP.

(1) Primarily comprising compensation expense for:

(i) fully vested LTIP Units issued to certain employees in lieu of all or a portion of any cash bonus earned, (ii) RSUs and (iii) shares issued under our ESPP.

(2) Represents share-based compensation expense for LTIP Units and OP Units issued in the Formation Transaction, which are subject to post-Combination employment obligations .

(3) Represents equity awards issued related to our successful pursuit of Amazon's new headquarters in National Landing.

(3) Included in "General and administrative expense:

Share-based compensation related to Formation Transaction and special equity awards"

in the accompanying statements of operations.

in the accompanying consolidated statements of operations.

As of December 31, 2021, we had $ 62.6 million of total unrecognized compensation expense related to unvested share-based payment arrangements, which is expected to be recognized over a weighted average period of 3.6 years.

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We provide a discretionary matching contribution.

Employees' contributions vest immediately and our matching contributions vest after one year .

Employees' contributions, which vests after one year of service.

Our contributions for each of the three years in the period ended December 31, 2021 were $ 2.4 million, $ 2.2 million and $ 2.0 million.

Beginning in 2021, certain employees were granted restricted share units ("RSUs") with time-based vesting requirements ("Time-Based RSUs") and RSUs with performance-based vesting requirements ("Performance-Based RSUs") as part of their annual compensation.

Vesting requirements and compensation expense recognition for the Time-Based RSUs and the Performance-Based RSUs are identical to those of the Time-Based LTIP Units and Performance-Based Units.

In January 2021, we granted 485,753 Time-Based LTIP Units, 627,874 Performance-Based LTIP Units, 18,343 Time-Based RSUs and 11,886 Performance-Based RSUs to certain employees with an estimated aggregate grant-date fair value of $ 24.4 million.

In January 2021, we granted 163,065 fully vested LTIP Units, with a total grant-date fair value of $ 4.8 million, to certain employees who elected to receive all or a portion of their cash bonus earned during 2020 paid in the form of fully vested LTIP Units.

Beginning in 2022, certain employees were granted performance-based, appreciation-only LTIP Units ("AO LTIP Units").

The AO LTIP Units are structured in the form of profit interests that provide for a share of appreciation determined by the increase in the value of a common share at the time of conversion over the participation threshold of $ 32.30 .

The AO LTIP Units have a three-year performance period.

50 % of any AO LTIP Units that are earned vest at the end of the three-year performance period and the remaining 50 % vest on the fourth anniversary of the date of grant, subject to continued employment.

The AO LTIP Units are subject to a TSR modifier whereby the number of AO LTIP Units that will ultimately be earned will be increased or reduced by as much as 25 %.

In January 2022, we granted 1.5 million AO LTIP Units, 702,888 Time-Based LTIP Units, 21,705 Performance-Based LTIP Units and 39,536 Time-Based RSUs to certain employees with an estimated aggregate grant-date fair value of $ 27.3 million.

In February 2022, we granted 252,206 fully vested LTIP Units, with a total grant-date fair value of $ 5.6 million, to certain employees who elected to receive all or a portion of their cash bonus earned, related to 2021 service, as LTIP Units.

Transaction and Other Costs

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(In thousands)

Relocation of corporate headquarters (1)

Demolition costs

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Completed, potential and pursued transaction expenses (1)

Relocation of corporate headquarters (2)

Transaction and other costs

(1) In November 2019, we relocated our corporate headquarters.

Upon the relocation of our corporate headquarters, we incurred an impairment loss on the right-of-use assets for leases related to our former corporate headquarters as well as other costs.

See Note 18 for additional information.

(2) For the year ended December 31, 2020, related to 223 23 rd Street and 2250 Crystal Drive (formerly 2300 Crystal Drive).

For the year ended December 31, 2019, related to 1900 Crystal Drive.

(3) For the year ended December 31, 2018, included transition services provided by our former parent.

(4) For the years ended December 31, 2020 and 2019, related to charitable commitments to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington D.C.

metropolitan region.

For the year ended December 31, 2018, r elated costs associated with the successful pursuit of Amazon's new headquarters at our properties in National Landing for the year ended December 31, 2018.

(1) Includes primarily legal and dead deal costs.

(2) In November 2019, we relocated our corporate headquarters and incurred an impairment loss on the right-of-use assets for leases related to our former corporate headquarters as well as other costs.

(3) Related to charitable commitments to the Washington Housing Conservancy, a non-profit that acquires and owns affordable workforce housing in the Washington D.C.

metropolitan area .

Interest Expense

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Interest expense related to finance lease right-of-use assets

Net loss (gain) on derivative financial instruments not designated as cash flow hedges:

Net unrealized

Net unrealized (gain) loss on derivative financial instruments not designated as accounting hedges

Capitalized interest

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In March 2020, our Board of Trustees authorized the repurchase of up to $ 500.0 million of our outstanding common shares.

During the year ended December 31, 2020, we repurchased and retired 3.8 million common shares for $ 104.8 million, an average purchase price of $ 27.72 per share.

In 2021, as of the date of this filing, we repurchased and retired 270,862 common shares for $ 8.1 million, an average purchase price of $ 29.93 per share, pursuant to a repurchase plan under Rule 10b5-1 of the Exchange Act.

During the year ended December 31, 2021, we repurchased and retired 5.4 million common shares for $ 157.7 million, a weighted average purchase price per share of $ 29.34 .

During the year ended December 31, 2020, we repurchased and retired 3.8 million common shares for $ 104.8 million, a weighted average purchase price per share of $ 27.72 .

Since we began the share repurchase program, we have repurchased and retired 9.1 million common shares for $ 262.4 million, a weighted average purchase price per share of $ 28.67 .

Shareholders' Equity

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Earnings (Loss) Per Common Share

The following is a summary of the calculation of basic and diluted earnings (loss) per common share and a reconciliation of the amounts of net income (loss) available to common shareholders used in calculating basic and diluted earnings per common share to net income (loss):

Year Ended December 31,

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Earnings (loss) per common share - basic and diluted

The effect of the redemption of OP Units and Time-Based LTIP Units that were outstanding as of December 31, 2020 and 2019 is excluded in the computation of diluted earnings per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings per share).

Since OP Units and Time-Based LTIP Units, which are held by noncontrolling interests, are attributed gains at an identical proportion to the common shareholders, the gains attributable and their equivalent weighted average OP Unit and Time-Based LTIP Unit impact are excluded from net income (loss) available to common shareholders and from the weighted average number of common shares outstanding in calculating diluted earnings per common share.

Performance-Based LTIP Units, Special Performance-Based LTIP Units and Formation Awards, which totaled 4.7 million, 4.7 million and 3.9 million for each of the three years in the period ended December 31, 2020, were excluded from the calculation of diluted earnings per common share as they were antidilutive, but potentially could be dilutive in the future.

The effect of the redemption of OP Units, Time-Based LTIP Units, fully vested LTIP Units and Special Time-Based LTIP Units that were outstanding as of December 31, 2021 and 2020 is excluded in the computation of diluted earnings (loss) per common share as the assumed exchange of such units for common shares on a one-for-one basis was antidilutive (the assumed redemption of these units would have no impact on the determination of diluted earnings (loss) per share).

Since OP Units, Time-Based LTIP Units, LTIP Units and Special Time-Based LTIP Units, which are held by noncontrolling interests, are attributed gains at an identical proportion to the common shareholders, the gains attributable and their equivalent weighted average impact are excluded from net income (loss) available to common shareholders and from the weighted average number of common shares outstanding in calculating diluted earnings (loss) per common share.

Performance-Based LTIP Units, Formation Awards and RSUs, which totaled 4.5 million, 4.7 million and 4.7 million for each of the three years in the period ended December 31, 2021, were excluded from the calculation of diluted earnings (loss) per common share as they were antidilutive, but potentially could be dilutive in the future.

Fair Value Measurements

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The net unrealized loss on our derivative financial instruments designated as cash flow hedges was $ 17.2 million and $ 43.9 million as of December 31, 2021 and 2020 and was recorded in "Accumulated other comprehensive loss"

in our balance sheets, of which a portion was reclassified to "Redeemable noncontrolling interests."

Within the next 12 months, we expect to reclassify $ 17.5 million as an increase to interest expense.

in our consolidated balance sheets, of which a portion was reclassified to "Redeemable noncontrolling interests."

Within the next 12 months, we expect to reclassify $ 11.4 million of the net unrealized loss as an increase to interest expense.

The fair values of the derivative financial instruments are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and observable inputs.

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Derivative financial instruments designated as cash flow hedges:

Classified as assets in "Other assets, net"

Classified as liabilities in "Other liabilities, net"

Derivative financial instruments not designated as cash flow hedges:

Derivative financial instruments not designated as accounting hedges:

Classified as assets in "Other assets, net"

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Classified as liabilities in "Other liabilities, net"

Derivative financial instruments not designated as accounting hedges:

Classified as assets in "Other assets, net"

The fair values of our derivative financial instruments were determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of the derivative financial instrument.

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While it was determined that the majority of the inputs used to value the derivatives fall within Level 2 of the fair value hierarchy under authoritative accounting guidance, the credit valuation adjustments associated with the derivatives also utilized Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default.

However, as of December 31, 2020 and 2019, the significance of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed, and it was determined that these adjustments were not significant to the overall valuation of the derivative financial instruments.

However, as of December 31, 2021 and 2020, the significance

of the impact of the credit valuation adjustments on the overall valuation of the derivative financial instruments was assessed, and it was determined that these adjustments were not significant to the overall valuation of the derivative financial instruments.

As a result, it was determined that the derivative financial instruments in their entirety should be classified in Level 2 of the fair value hierarchy.

The net unrealized gains and losses included in "Other comprehensive income (loss)"

in our statements of comprehensive income (loss) for each of the three years in the period ended December 31, 2020 were attributable to the net change in unrealized gains or losses related to the interest rate swaps that were outstanding during those periods, none of which were reported in our statements of operations as the interest rate swaps were documented and qualified as hedging instruments.

in our consolidated statements of comprehensive income (loss) for each of the three years in the period ended December 31, 2021 were attributable to the net change in unrealized gains or losses related to the interest rate swaps that were outstanding during those periods, none of which were reported in our consolidated statements of operations as the interest rate swaps were documented and qualified as hedging instruments.

Fair Value Measurements on a Nonrecurring Basis

Assets measured at fair value on a nonrecurring basis on our balance sheet as of December 31, 2020 consisted of a commercial real estate asset, One Democracy Plaza located in Bethesda, Maryland, that was written down to its estimated fair value of $ 3.3 million, including the right-of-use asset associated with the property’s ground lease, and was classified as Level 3 in the fair value hierarchy.

We evaluate the carrying amount of our assets for impairment.

An impairment exists when the carrying amount of an asset exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

In connection with the preparation and review of our 2021 annual consolidated financial statements, we assessed the recoverability of the carrying amount of our real estate and related intangible assets.

This assessment resulted in the remeasurement of 7200 Wisconsin Avenue, RTC-West and a future development parce1, which are non-core assets that were written down to their estimated aggregate fair value of $ 309.0 million and were classified as Level 2 in the fair value hierarchy.

Our estimates of the fair values were based on expected sales prices as determined by contracts under negotiation as of December 31, 2021, after adjusting for estimated selling costs.

The remeasurements results in impairment losses totaling $ 25.1 million, which are included in "Impairment loss"

in our consolidated statement of operations.

In connection with the preparation and review of our 2020 annual consolidated financial statements, we assessed the recoverability of the carrying amount of our real estate and related intangible assets.

This assessment resulted in the remeasurement of One Democracy Plaza, a non-core commercial asset which was written down to its estimated fair value of $ 3.3 million, including the right-of-use asset associated with the property's ground lease, and was classified as Level 3 in the fair value hierarchy.

Our estimate of fair value was determined using a discounted cash flow model, which considers, among other things, the anticipated holding period, current market conditions and utilizes unobservable quantitative inputs, including appropriate capitalization and discount rates.

In connection with the preparation and review of our 2020 annual financial statements, we recognized an impairment loss of $ 10.2 million, which is included in "Impairment loss"

on our statement of operations.

There were no other assets measured at fair value on a nonrecurring basis as of December 31, 2020.

Assets measured at fair value on a nonrecurring basis on our balance sheet as of December 31, 2019 consisted of the right-of-use asset related to our former corporate office lease, which we measured for impairment upon relocation to our new corporate headquarters in November 2019.

Prior to the relocation, we leased office space in a building we owned through one of our unconsolidated real estate ventures.

With the adoption of Topic 842 in January 2019, we recorded a right-of-use asset based on the expected future use of our former headquarters.

Upon the relocation of our corporate headquarters, we impaired the right-of-use asset due to our change in use of the asset.

The fair value of the right-of-use asset subsequent

to the relocation was based on Level 3 inputs, including estimated sublease income and our incremental borrowing rate.

During the year ended December 31, 2019, we recognized an impairment loss of $ 10.2 million and certain additional expenses related to the relocation of our corporate headquarters, which is included in "Transaction and other costs"

on our statement of operations.

There were no other assets measured at fair value on a nonrecurring basis as of December 31, 2019.

See Note 15 for additional information.

The remeasurements resulted in an impairment loss of $ 10.2 million, which is included in "Impairment loss"

in our consolidated statement of operations.

There were no other assets measured at fair value on a nonrecurring basis as of December 31, 2021 and 2020.

Financial Assets and Liabilities Not Measured at Fair Value

As of December 31, 2020 and 2019, all financial instruments and liabilities were reflected in our balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following:

As of December 31, 2021 and 2020, all financial instruments and liabilities were reflected in our consolidated balance sheets at amounts which, in our estimation, reasonably approximated their fair values, except for the following:

December 31, 2021

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The fair values of the mortgages payable, revolving credit facility and unsecured term loans were determined using Level 2 inputs of the fair value hierarchy.

The fair value of our mortgages payable is estimated by discounting the future contractual cash flows of these instruments using current risk-adjusted rates available to borrowers with similar credit profiles based on market sources.

The fair value of our revolving credit facility and unsecured term loans is calculated based on the net present value of payments over the term of the facilities using estimated market rates for similar notes and remaining terms.

Segment Information

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The CODM measures and evaluates the performance of our operating segments, with the exception of the third-party asset management and real estate services business, based on the net operating income ("NOI") of properties within each segment.

NOI includes property rental revenue and other property revenue, and deducts property operating expenses and real estate taxes.

NOI includes property rental revenue and parking revenue, and deducts property operating expenses and real estate taxes.

With respect to the third-party asset management and real estate services business, the CODM reviews revenue streams generated by this segment ("Third-party real estate services, including reimbursements"), as well as the expenses attributable to the segment ("General and administrative:

third-party real estate services"), which are both disclosed separately in our statements of operations.

The following represents the components of revenue from our third-party real estate services business:

third-party real estate services"), which are both disclosed separately in our consolidated statements of operations.

The following represents the components of revenue from our third-party asset management and real estate services business:

Year Ended December 31,

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Third-party real estate services revenue less expenses

(1) Estimated development fee revenue totaling $ 69.8 million as of December 31, 2020 is expected to be recognized over the next seven years as unsatisfied performance obligations are completed.

(1) As of December 31, 2021 , we had estimated unrecognized development fee revenue totaling $ 48.6 million, of which $ 13.8 million, $ 12.0 million and $ 6.3 million is expected to be recognized in 2022 , 2023 and 2024 , and $ 16.5 million is expected to be recognized thereafter through 2027 as unsatisfied performance obligations are completed.

(2) Represents reimbursement of expenses incurred by us on behalf of third parties, including allocated payroll costs and amounts paid to third-party contractors for construction management projects.

Management company assets primarily consist of management and leasing contracts with a net book value of $ 25.5 million and $ 31.5 million and are classified in "Other assets, net"

in our balance sheets as of December 31, 2020 and 2019.

Management company assets primarily consist of management and leasing contracts with a net book value of $ 19.6 million and $ 25.5 million as of December 31, 2021 and 2020, which are classified in "Other assets, net"

in our consolidated balance sheets.

Consistent with internal reporting presented to our CODM and our definition of NOI, the third-party asset management and real estate services operating results are excluded from the NOI data below.

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Impairment loss

Reduction of gain on bargain purchase

Income tax benefit

Income tax expense (benefit)

Net income (loss) attributable to redeemable noncontrolling interests

Net loss attributable to noncontrolling interests

Third-party real estate services, including reimbursements revenue

Other revenue

Income (loss) from unconsolidated real estate ventures, net

Loss from unconsolidated real estate ventures, net

Interest and other income (loss), net

Gain on sale of real estate

Net loss attributable to noncontrolling interests

Consolidated NOI

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Property rental revenue

Other property revenue

Parking revenue

Total property revenue

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Property rental revenue

Other property revenue

Parking revenue

Total property revenue

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Property rental revenue

Other property revenue

Parking revenue

Total property revenue

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Investments in unconsolidated real estate ventures

Total assets (1)

December 31, 2020

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Investments in unconsolidated real estate ventures

Total assets (1)

(1) Includes assets held for sale.

See Note 4 for additional information .

Commitments and Contingencies

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Our debt, consisting of mortgages payable secured by our properties, a revolving credit facility and unsecured term loans, contains customary covenants requiring adequate insurance coverage.

Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at reasonable costs in the future.

If lenders insist on greater coverage than we are able to obtain, it could adversely affect the ability to finance or refinance our properties.

Although we believe that we currently have adequate insurance coverage, we may not be able to obtain an equivalent amount of coverage at a reasonable cost in the future.

If lenders insist on greater coverage than we are able to obtain, it could adversely affect our ability to finance or refinance our properties.

Construction Commitments

As of December 31, 2020, we had construction in progress that will require an additional $ 18.9 million to complete ($ 9.6 million related to our consolidated entities and $ 9.3 million related to our unconsolidated real estate ventures at our share), based on our current plans and estimates, which we anticipate will be primarily expended over the next one to two years .

These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset recapitalizations and sales, issuance and sale of equity securities, and available cash.

As of December 31, 2021, we had assets under construction that will, based on our current plans and estimates, require an additional $ 291.4 million to complete, which we anticipate will be primarily expended over the next two to three years .

These capital expenditures are generally due as the work is performed, and we expect to finance them with debt proceeds, proceeds from asset recapitalizations and sales, and available cash.

Environmental Matters

Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the subject and surrounding assets.

Most of our assets have been subject, at some point, to environmental assessments that are intended to evaluate the environmental condition of the assets.

The environmental assessments did not reveal any material environmental contamination that we believe would have a material adverse effect on our overall business, financial condition or results of operations, or that have not been anticipated and remediated during site redevelopment as required by law.

Nevertheless, there can be no assurance that the identification of new areas of contamination, changes in the extent or known scope of contamination, the discovery of additional sites or changes in cleanup requirements would not result in significant cost to us.

Environmental liabilities total $ 18.2 million and $ 17.9 million as of December 31, 2020 and 2019, and are included in "Other liabilities, net"

in our balance sheets.

Environmental liabilities totaled $ 18.2 million as of December 31, 2021 and 2020, and are included in "Other liabilities, net"

in our consolidated balance sheets.

Operating and Finance Leases

As of December 31, 2020, the weighted average discount rate used in calculating lease liabilities for our active operating and finance leases was 5.4 % and 4.2 %, which had weighted average remaining lease terms of 10.9 years and 98.0 years.

As of December 31, 2021, our operating and finance lease liabilities were calculated based on the weighted average discount rates of 5.5 % and 4.5 %, and had weighted average remaining lease terms of 5.4 years and 97.7 years.

As of December 31, 2021, future minimum lease payments under our non-cancellable operating and finance leases are as follows:

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Imputed interest

(1) The total for operating leases of $ 10.8 million corresponds to liabilities related to operating lease right-of-use assets and the total for finance leases of $ 40.2 million corresponds to liabilities related to finance lease right-of-use assets, both of which are included in "Other liabilities, net"

as of December 31, 2020.

See Note 10 for additional information.

During the years ended December 31, 2020 and 2019, we incurred $ 2.9 million and $ 2.3 million of fixed operating and finance lease costs, and $ 1.6 million and $ 1.3 million of variable operating lease costs.

( 1,203,246 )

Total liabilities related to lease right-of-use assets

During the year ended December 31, 2021, we incurred $ 731,000 and $ 2.8 million of fixed operating and finance lease expenses, and $ 2.6 million of variable operating lease expenses.

During the year ended December 31, 2020, we incurred $ 1.1 million and $ 1.8 million of fixed operating and finance lease costs, and $ 1.6 million of variable operating lease costs.

As of December 31, 2021, we had committed tenant-related obligations totaling $ 76.0 million ($ 70.7 million related to our consolidated entities and $ 5.3 million related to our unconsolidated real estate ventures at our share).

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As of December 31, 2021, we had no principal payment guarantees related to our unconsolidated real estate ventures.

Additionally, with respect to borrowings of our consolidated entities, we have agreed, and may in the future agree, to (i) guarantee portions of the principal, interest and other amounts, (ii) provide customary environmental indemnifications and nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to lenders, tenants and other third parties for the completion of development projects.

nonrecourse carve-outs (e.g., guarantees against fraud, misrepresentation and bankruptcy) or (iii) provide guarantees to lenders, tenants and other third parties for the completion of development projects.

As of December 31, 2021, the aggregate amount of principal payment guarantees was $ 8.3 million for our consolidated entities.

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Our third-party asset management and real estate services business provides fee-based real estate services to the WHI, Amazon, the JBG Legacy Funds and other third parties.

We provide services for the benefit of the JBG Legacy Funds that own interests in the assets retained by the JBG Legacy Funds.

In connection with the contribution to us of the assets formerly owned by the JBG Legacy Funds as part of the Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds that were held by certain former JBG executives (and who became members of our management team and/or Board of Trustees) were not transferred to us and remain under the control of these individuals.

In addition, certain members of our senior management and Board of Trustees have an ownership interest in the JBG Legacy Funds and own carried interests in each fund and in certain of our real estate ventures that entitle them to receive cash payments if the fund or real estate venture achieves certain return thresholds.

The WHI was launched by us and the Federal City Council in June 2018 as a scalable market-driven model that uses private capital to help address the scarcity of housing for middle income families.

We are the manager for the WHI Impact Pool, which is the social impact debt financing vehicle of the WHI.

In connection with the contribution to us of certain assets formerly owned by the JBG Legacy Funds as part of the Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds that were held by certain former JBG executives (and who became members of our management team and/or Board of Trustees) were not transferred to us and remain under the control of these individuals.

In addition, certain members of our senior management team and Board of Trustees have ownership interests in the JBG Legacy Funds and own carried interests in each fund and in certain of our real estate ventures that entitle them to receive cash payments if the fund or real estate venture achieves certain return thresholds.

We launched the WHI with the Federal City Council in June 2018 as a scalable market-driven model that uses private capital to help address the scarcity of housing for middle income families.

We are the manager for the WHI Impact Pool, which is the social impact financing vehicle of the WHI.

As of December 31, 2021, the WHI Impact Pool had completed closings of capital commitments totaling $ 114.4 million, which included a commitment from us of $ 11.2 million.

As of December 31, 2021, our remaining commitment was $ 8.3 million.

The third-party real estate services revenue, including expense reimbursements, from the JBG Legacy Funds and the WHI Impact Pool was $ 22.6 million, $ 22.4 million and $ 36.5 million for each of the three years in the period ended December 31, 2021.

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We rented our former corporate offices from an unconsolidated real estate venture and made payments totaling $ 1.3 million, $ 4.6 million and $ 5.0 million for each of the three years in the period ended December 31, 2021.

In November 2019, we relocated our corporate headquarters.

Upon the relocation of our corporate headquarters, we impaired the right-of-use asset due to our change in the use of the asset.

See Note 18 for additional information.

We have agreements with Building Maintenance Services ("BMS"), an entity in which we have a minor preferred interest, to supervise cleaning, engineering and security services at our properties.

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in our statements of operations.

Quarterly Financial Data (unaudited)

Quarter (2) (3)

Quarter (2) (4)

(In thousands, except per share data)

Total revenue

Net income (loss)

Net income (loss) attributable to common shareholders

Earnings (loss) per share - basic and diluted

(1) During the first quarter of 2020, we recognized a gain on the sale of real estate of $ 59.5 million from the sale of Metropolitan Park.

(2) Beginning in the second quarter of 2020, as a result of COVID-19, we have experienced significantly decreased retail revenue, which has resulted in increased credit losses and write-offs against rent receivables, decreased multifamily revenue due to lower occupancy and higher concession, a decline in parking revenue, depressed near-term leasing activity in our commercial and multifamily portfolios and increased interest expense from borrowings.

(3) During the second quarter of 2020, we recorded a $ 6.5 million impairment loss related to our investment in our former unconsolidated real estate venture that owns The Marriott Wardman Park.

(4) During the fourth quarter of 2020, in connection with the preparation and review of our 2020 annual financial statements, we recorded a $ 10.2 million impairment loss due to the write-down of One Democracy Plaza, a commercial real estate asset located in Bethesda, Maryland, to its estimated fair value.

Additionally, during the fourth quarter of 2020, we recorded $ 15.0 million against deferred (straight-line) rent receivables and $ 8.2 million of income associated with certain lease guarantees.

(In thousands, except per share data)

Total revenue

Net income (loss)

Net income (loss) attributable to common shareholders

Earnings (loss) per share - basic and diluted

(1) During the first quarter of 2019, we recognized a gain on the sale of real estate of $ 39.0 million from the sale of Commerce Executive/Commerce Metro Land.

(2) During the third quarter of 2019, we recognized a gain on the sale of real estate of $ 8.1 million from the sale of 1600 K Street.

(3) During the fourth quarter of 2019, we recognized an aggregate gain on the sale of real estate of $ 57.9 million, from the sale of Vienna Retail, and the partial sale and remeasurement of our remaining interest subsequent to the transfer of control in the real estate venture that owns Central Place Tower.

Additionally, during the fourth quarter of 2019, we incurred an impairment loss of $ 10.2 million and certain additional expenses related to the relocation of our corporate headquarters .

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data